News and structure

Sometimes news breaks a range that's lasted for weeks, all in a single candle. But the breakout rule doesn't change: a breakout is a close, not a wick.

If the news candle's wick went past the level but the candle closed back on the old side, there's no breakout. That looks more like the sweep you'll see in the next lesson.

Even after a real breakout on news, you look for the entry on the retest: price comes back to test the broken level, and if it holds, you get in.

Stops pile up above equal highs and below equal lows. When news hits, price often reaches into one of these pools.

If the news candle wicks into the pool and closes back on the level's old side, that's a sweep: the stops are taken, and the fuel in that direction is spent.

A sweep is usually followed by a move the other way. Enter at the close of the sweep candle or on the first pullback; stop beyond the tip of the wick.

At Lightning Rock we said, 'don't trade the first candle.' The sweep is the one exception: the pool was in plain sight, the news swept only that side, the close is back on the old side, and the stop has a clear home at the tip of the wick.

The rate decision is usually known in advance: the market prices in the expectation weeks ahead. The surprise usually lies in the statement's wording and in the chair's words.

The first wave comes with the statement. Half an hour later the press conference begins, and the chair's words can extend the first wave or reverse it completely.

At the March, June, September and December meetings, Fed members' rate projections come out too; on those days the storm can be bigger.