On the daily chart below, we can see the big selloff that started as the market got rejected from the strong 4175 resistance and the strong NFP report changed the outlook of future interest rates.
February was a bad month for risk assets as many key economic indicators signalled a reacceleration in activity and inflation which is a bad omen for the soft landing narrative that the market has previously traded on. The trend for now is bearish as the upward trendline got broken and the moving averages have crossed to the downside.
The next big test for the sellers will be the big downward trendline that may give some support for the buyers. If the price falls below that, there’s only the 3800 level that may save the day, otherwise it will be a long fall towards the October 2022 low.
In the 4 hour chart below, we can see that we got a selloff on Friday as the US PCE report beat expectations on all fronts. The market is now looking at a higher terminal rate and the chances of a recession may have increased.
The moving averages are acting as resistance for the current bearish trend and, barring some misses in the economic data this week, we should keep seeing the sellers in control.
In the 1 hour chart below, we can see that the price has pulled back since the low set after the US PCE report and it’s now trading near the trendline and the previous support area that now may turn into a resistance.
We can also see the Fibonacci retracement levels that can offer some resistance for the sellers with the price reacting to the 50% level. The divergence between the price and the MACD signals a weakening selling momentum, so this pullback was due and if the price breaks the trendline we may see a bigger pullback towards the 4025 level before finding sellers.
