After Wednesday's sharp Federal Reserve triggered a fall, the markets bounced back Thursday. On Wednesday, Fed Chairman Janet Yellen said interest rates may start to rise in approximately one year, which spooked markets as the Dow Jones Industrial Average tumbled 200 points from its highs.
By Thursday, the markets had recovered much of that dip. Investors and traders are wondering whether or not the markets are headed dramatically higher or if they are getting ready to dump again.
Levels To Watch
All you need to do is follow Wednesday's chart. Take the high on the SPDR S&P 500 (SPY) just before the FOMC Statement. That level was $187.90. The low was $185.50. As long as the market remains in this range you should have a neutral bias. If the markets break above the high on the SPY of $187.90, a bullish bias should be taken as the markets will likely trade higher in the coming days. If the markets take out the lows of $185.50, a very bearish stance should be taken as the markets are likely headed much lower and quickly.
Bottom line? Keep it simple and forget the nonsense like MACD and RSI. Just follow the price action.
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