On the daily chart below, we can see that the buyers couldn’t break the resistance at 4175 as the blockbuster NFP report changed the market expectations of future interest rates.
The minor upward trendline that was acting as support for the rally was breached as Fed’s Bullard mentioned that he would be open for a 50 bps hike at the March meeting and that he sees a higher terminal rate as more appropriate.
The market will be looking at incoming economic data, especially the next NFP and CPI reports to decide where to go next. We are in a “good news is bad news” environment now for the stock market so watch out for more selloffs in case of hot data.
In the 4 hour chart below, we can see that the market is founding some short term bottom as depicted by the multiple wicks around the 4000 level. We may see a pullback towards the 4060 level where we can also find the 38.2% Fibonacci retracement level.
That’s going to be a strong level where we should see sellers piling in. With a break higher though, we may see the buyers extend the rally towards the broken trendline and the 61.8% Fibonacci retracement level around 4110-4120.
In the 1 hour chart below, we can see that the price broke out of the downward trendline. This may be a signal of a change in momentum as we can also see from the hourly moving averages crossing to the upside.
Once the buyers manage to break the 4025 level we should see the pullback towards the previously mentioned 4060 resistance. In case this is just a fakeout, sellers will start to pile in again on the break of the low at 3984.
