On the daily chart below, we can see that the resistance at 4175 is still holding and the buyers are having a hard time breaking it. You can feel the battle between buyers and sellers as recently the soft-landing narrative changed into the no-landing one where the Fed may have not done enough to depress growth and return inflation back to the 2% target.
After the “wow” NFP report, we saw the US CPI data coming within expectations but those expectations were high with M/M readings too high for a return to 2%. The disinflationary trend seemed also to have slowed.
Yesterday we also got a big beat in Retail Sales, which is another bad signal for the Fed and may require a higher terminal rate than they projected in December 2022.
In the 4 hour chart below, we can see that the constant knocking on the 4175 door coupled with the trendline may form an ascending triangle pattern.
The price can break on either side of the triangle, as the buyers may have the strength to break higher and lead to higher momentum or not enough strength exhausting them and lead to a sell off as they cover positions and the sellers exacerbate the downward momentum.
In the 1 hour chart below, we can see more closely the recent catalysts and the market not doing much other than chopping around. The price is basically in no man’s land and the best strategy would be to wait for a clear breakout.
Today we will get the US Jobless Claims data and although it’s likely that we will see another round of choppiness after some volatility, big surprises should move the market.
A big miss would again signal the strength of the labour market, but a big beat would be less expected and probably lead the market to speculate on weakening labour market going forward.
