I have been tracking a number of highly correlated markets from the Oct time frame. The new high and low (depending on which market) appears to be the 5th wave of an impulse wave from that’s been developing from Oct 2019. So the expectation as we head into the FOMC this week is a potential reversal setup.
Based on the next move will have big implications going forward. If the moves from October 2019 do not get fully retraced on markets such as the ES or US 10 year notes (ZN), then it’s likely going to support more upside for US stocks, as well as a continuation lower US 10 year notes (yields higher), etc.
If you are looking to buy the dip on US or European stocks, then at least wait for the market to pullback/correct the advance from the Oct low on markets like the ES and FDAX. A 3 wave decline is a bullish setup, a full retracement below the Oct low would be a bearish development.
ZN vs FDAX & ES