What to expect with FOMC & PPI on Tap

We have the FOMC meeting this week and PPI data coming out. So similar to last week the market will be setting up for the announcement. Last week we had chop then a late week rally after the inflation data was released despite the fact that inflation data came out higher than anticipated. For now the market is buying the idea that inflation will be transitory and the Fed will not need to react by increasing interest rates.

This week we get to find out what the Fed really thinks with the Fed minutes and a rate decision. Looking at the past three meetings (Red vertical lines) the market rallied into the meeting and sold off afterward. If the trend continues expect an early week rally and breakout followed by a sell off as price potentially hits the first red resistance zone (1.13/1.27 fib extensions). As I have posted many times I believe the market wants to get to the 4450 level, but it may need another rest before it gets there so another pull back to the 21 ema is not out of the questions.

My plan at the moment is to continue take profits on current position if we get a bullish push and remain cautious about adding new positions until after the FOMC.

As always I trade what I see not what I think so price will dictate my actions.