On the daily chart below, we can see that the price is now close to the support at 1920. The red long period moving average is also offering support to the price, so we need to first see a clear break of 1920 zone for the sellers to have more conviction for a bigger downside move.
The buyers will need to hold the line and have some fundamental catalyst on their side to get enough strength to target the resistance at 2030. For now, the bias remains bearish.
In the 4 hour chart below, we can see that the market is currently ranging as the market is uncertain on what’s next given the recent hot economic data and the hawkish repricing of interest rates expectations.
There’s some talk by Fed’s members that we shouldn’t overreact to one month of data and that seasonal adjustments may be skewing the data. This leads us to give more weight to the technicals and wait for a clear break before taking positions.
In the 1 hour chart, we can see that the recent breakout of the trendline was not enough to give sellers the momentum to break below the 1920 support. The price bounced and moved up to retest the trendline.
As we can see, the recent catalysts didn’t offer much neither for the buyers nor for the sellers. We should be in an environment now where good news is bad news because the Fed may be forced to do more to bring inflation back to its 2% target. This should weigh on risk assets like stock indices.
