SQUEEZE.
Fast break the other way.
How you want to frame it, the CPI came in hotter. The markets reacted. Stocks got hammered. Yields moved higher. The USD move higher.
However, traders still need to pay attention. Levels still matter. Momentum still matters, and levels could not sustain the bias. Traders were forced to cover. The squeeze is on.
Looking at the stocks:
- The Dow is up 500 points
- The S&P which opened well below the 200 week MA at 3600 is now at $3621
- The Nasdaq which fell over 3% is now up 1.0%.
THe US yields moved higher and although still up on the day the 10 year yield moved to 4.08% and above the old high at 4.01% is now at 3.96%.
The USD was only behind the GBPUSD as the strongest of the majors . It is now sharply lower vs the GBP. It is down -0.70% vs the EUR. It is lower vs the USDCAD. Although it is still higher vs the JPY, CHF, AUD and NZD, most of the gains have been erased.
Trading involves risk. Markets also don't always do what you think they will do. The price action helps to tell the story. Applying technical levels helps to keep the discipline, even when you think you can't go wrong.
Looking at the EURUSD, the price decline moved back above the swing area from 0.9662 to 0.9683 and then back above the 100 hour MA at 0.97124 (blue line on the chart below). That should not have happened. The sellers turned to buyers.
The price moved to a new high and now looks to the 200 hour MA at 0.97905. That is the next key target to get to and through IF the buyers are to take back more control. Support now? Swing area from 0.9733 to 0.9750 and then the broken 100 hour MA at 0.97124.
