Yesterday saw high volatility post the FOMC, as expected and a pick up in volume. The move higher stopped short of the upper range in the chart above and brought in sellers at the composite low volume area to drive back down into value. The market now is digesting the prospect of a longer wait for rates to rise on the back of the dovish statement by Yellen. Bonds rallied to regain much of their loss from the beginning of the week.
The market does still remain within the range from December and could still see responsive buying accumulate at the areas of high volume shown above. The main fear for longs is a break underneath that range and a hold below the composite HVN at 1928.75 which would put shorts firmly in control on the higher timeframe, which would put the 1852-57 low volume area as a major target for them (initially).
The RTH profiles below show the areas to fill in today potentially. Overnight has moved into this middle area with the range currently 1953.25-1983.00 versus settlement at 1977.25
My expected moves for today are either (N.B. quad witching today - potentially increased vol at open & close)
1. Attempt to close the range & settlement gap from yesterday (based on current overnight level at 1958), then sellers regain control and try to take out the overnight low to re-test the value area from 09/14 (1938.75-43.75)
2. Try to close the gap from yesterday then sellers push for the overnight lows and find responsive buyers, then two-sided trade within 09/15 range
3. No attempt at closing the gap, sellers in control and hold below overnight low for test of the low of last weeks range potentially.