Chop Before FOMC: Why Markets Go Sideways Before Big Announcements
Chop Before FOMC: How to Survive the Calm Before the Storm
FOMC week feels different. Liquidity dries up. Price stalls inside tight ranges. This chop is not random. It is engineered to trap traders and load liquidity for the violent move that comes after the announcement.
What is the chop before FOMC
In the days leading into the Federal Open Market Committee announcement markets often compress. The Nasdaq moves sideways inside narrow ranges. Traders expecting trend or breakout get chopped up. The purpose is simple. Institutions are accumulating and offloading positions while setting up liquidity for the post announcement move.
Why this matters
If you try to force trades during this time you donate. Chop is not a mistake. It is a phase. Understanding it keeps you from bleeding capital before the real move comes. The patience to wait is what separates professionals from gamblers.
How to recognize it
- Price sits inside a defined range with repeated failed breakouts
- Volume thins out compared to normal days
- Both sides of liquidity get taken but price returns to center
- Every move feels designed to frustrate traders
How to trade it
The best trade is often no trade. Preserve mental and financial capital. If you must participate size down and aim for smaller objectives. Keep expectations realistic. Chop days are about survival not hitting home runs.
The real move comes after
Once the announcement hits volatility returns. Liquidity injected during chop becomes the fuel. Traders who conserved energy and capital are ready to act. Those who fought the chop are already buried.
