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On July 10, everyone's eyes and ears were on one thing – the Fed. And there's a good reason why.
You see, after the U.S.-China trade war heated up last May, the market fell further than it had all year. And the Fed was the only thing that was able to pull it back up.
Yesterday, Fed Chairman Jerome Powell delivered his long-awaited testimony before the House Financial Services Committee. And the market was listening for one very important catalyst…
The Fed's testimony, as expected, was one of the biggest market movers to date. And later this month, we're set to see one that's even bigger.
If you want to bank some serious cash on the fast swing, then this is all you need to know…
Five Things to Expect from the Market's Four Corners
According to Powell's testimony, the U.S. central bank may cut interest rates for the first time in 10 years.
Basically, the Fed chairman said that the rising trade tensions and weakening economy have made the case for a rate cut stronger, and it could be coming by the end of this month. And the market reacted to the news…
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The NASDAQ closed at all-time highs, and the S&P 500 crossed above the 3,000 mark for the first time ever. Clearly, the market is riding this interest rate high.
To play these rising prices flawlessly, it's important to look at the following four corners of the market…
TLT is an ETF designed to track the investment results of an index made up of U.S. Treasury bonds that have remaining maturities greater than 20 years. Last week, TLT looked like it was breaking out of a triangle pattern – but as you can see, it's still there today. What's not there is the price, as TLT is trading under the ascending support line of that triangle.
Right now, this looks like a failed breakout. And if things continue on this track, then that very well may end up being the case. TLT is testing a price level of $132 – if this doesn't hold, then I can see the ETF sliding back down to 130.
Now, the upcoming interest rate cut will undoubtedly affect bonds, and therefore TLT, which could keep it trading in this price area until then. Lately, equities and bonds have both traded higher, so it will be interesting to see if that stays the same after the Fed's decision at the end of the month.
3. Invesco CurrencyShares Euro Trust (NYSE: FXE)
FXE seeks to track the price of the euro – and a bullish signal appeared on its chart today.
Now, I have been keeping an eye on FXE's descending channel over the past few weeks – from when it first broke out to when it fell back into the channel. But that view isn't on my radar right now.
Instead, this bullish signal is showing a potential upward price move.
About the Author
Tom Gentile is widely known as America's #1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Now, he's diving into the biggest market in the world - one that almost no one has heard of before.