On the daily chart below, we can see that the selloff after the FOMC decision didn’t last for long as the buyers stepped in again and reversed half of the move. This market is dominated by optimists that keep on defying any negative news that’s being thrown to them.
Instead of looking at the Fed’s hike and the willingness of keeping interest rates high for longer, the market is looking at rate cuts. Instead of looking at the stress in the banking sector, the market is looking at the liquidity provided by the Fed to backstop any negative consequences.
Instead of looking at the hot economic data like the US PMIs last week as something that may force the Fed to do more, the market is looking at the resilience of the economy on the face of everything that has happened. It’s a tough environment for the bears.
On the 4 hour chart below, we can see that the break above the trendline may turn into a bullish flag pattern once the buyers manage to break above the 11829 resistance again. The target for the pattern would be the 13000 level. The moving averages are crossed to the upside giving further confirmation of a bullish trend. The first target for the buyers on the break of the 11829 level will be the resistance at 12274.
On the 1 hour chart below, we can see that the sellers tried two times to break below the 11669 support. That’s what they will be eyeing and waiting for before piling in and extending the move downwards.
The moving averages on this lower timeframe are crossed to the downside as the sellers try to keep the momentum going. A break above the red long period moving average and the 11829 resistance though would give the buyers control and should lead to the rally towards the next resistance at 12274.
