Before big events like the FOMC meeting, the market can be tricky. It often settles into a range based on previous session levels. Institutions, algorithms, and market makers typically wait for clearer signals, which can create fake breakouts or crashes that confuse newer traders. Take the S&P 500 E-mini Futures (ES) as an example. Key levels to watch are the Value Area High (VAH) at 6421.5, Point of Control (POC) at 6406.0, and Value Area Low (VAL) at 6398.0. Trading within these levels before the FOMC meeting can be beneficial. Focus on staying within the range instead of guessing breakout directions.

Avoid Common Trading Mistakes

Many traders mistakenly think a price movement signals a breakout. Overtrading can lead to hefty losses. It’s vital to spot these traps and stay disciplined. Instead of trying to capture the entire range, aim for a substantial portion of the move, then step back. Don’t force trades—be patient for clear entries at range extremes. Managing your positions well and taking reasonable profits without being greedy is crucial. After the FOMC meeting, market movements can change quickly, so concentrate on setups leading up to the event. With the FOMC announcement happening later today, the market is tightening up as we anticipated. Big players are biding their time, resulting in the S&P 500 E-mini futures being confined to a narrow range for the last few sessions. This isn’t the moment to chase drastic movements; instead, play within the established boundaries. This uncertainty makes sense. Recent data shows the Fed should be cautious. The June 2025 CPI report revealed inflation stubbornly above target at 3.1%. Meanwhile, the latest jobs report hints at a cooling labor market. This mixed information has traders anxious, waiting for any signal on future policies from the Fed’s statement.

Strategic Trading Approach

For today’s session, the S&P 500 futures remain within yesterday’s value area, roughly between 6398.0 and 6421.5. Our strategy is to trade around the edges of this range, avoiding bets on a breakout before the news. Watch for price failures at the highs or support at the lows, then expect a move back toward the center. We’ve seen similar patterns leading up to important meetings in 2023 and 2024. Often, markets make sharp, emotional moves that seem to start a new trend, only to reverse violently when the weaker traders get caught. History indicates that these pre-event rallies or dips are typically traps meant for impatient traders. The biggest mistake right now is assuming that a push to 6421.5 indicates a real breakout. Market makers are likely to absorb that buying interest before driving prices down again. Overtrading in this volatile environment is the quickest route to losing money before the main event even occurs. Instead, focus on capturing a solid piece of the intraday movement. You don’t have to ride a trade from low to high to have a successful day. Taking a clean profit near the range’s middle and stepping aside is a wise move. While the market feels steady, implied volatility in options suggests otherwise. The VIX has been low at about 15, but options expiring this week suggest a much larger move after the announcement. This indicates while things seem calm, pressure is building for a significant shift later today. Stick to your levels and wait for clear setups near the range edges. Use smaller position sizes to protect your capital from sudden spikes before the announcement. If you miss an entry, let it go; opportunities will likely arise in this environment. Remember, the entire market dynamics will change once the FOMC statement is released. Current levels and ranges may become irrelevant within minutes. The game we are playing now wraps up this afternoon, so trade it for what it is—a temporary, range-bound opportunity. Create your live VT Markets account and start trading now.

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