CPI y/y reflects the percentage change in consumer prices compared to the same month of the previous year.
It offers a stable and less volatile measure of inflation, allowing traders to assess longer-term inflationary trends and make more informed decisions regarding monetary policy, investment strategies, and currency movements.
Technical Report: Impact of CPI Data on DXY
Date: [May 10, 2023]
Summary: This technical analysis attempts to give traders tips on how to position themselves in the DXY (US Dollar Index) market based on CPI (Consumer Price Index) data that will be issued in a few hours. We will examine the probable effects of CPI data on the DXY and give trader-specific insights.
Resilience and Fractal Resistance: The DXY has displayed resilience in its attempts to recover above the 102.20/102.40 level. In yesterday’s session, a new fractal resistance was formed at 101.83 (resistanceH4). This resistance level has proven significant and may indicate a bearish sentiment in the market.
Potential Bearish Bat Pattern: Above the resistance level, there is a possibility of a bearish bat pattern emerging. The pattern is projected around 102.24, slightly below the daily fractal resistance positioned at 102.40. Traders should closely monitor this pattern, as it could serve as a confirmation of the bearish sentiment in the market.
Parallel Channel Resistance: Since April 14th, the DXY has been developing an ascending parallel channel, which has been supported by the formation of the weekly fractal support at 100.79. The formation of a bearish bat pattern near the daily fractal resistance level could fortify the parallel channel resistance, signaling additional lower action in the DXY after completion.
Impact of CPI Data: The CPI data release can have a significant impact on the DXY. Higher-than-expected CPI figures could lead to increased inflationary concerns and potentially weigh on the DXY, supporting a bearish outlook. Conversely, lower-than-expected CPI figures may alleviate inflationary pressures and provide support for the DXY, leading to a potential bullish scenario.
The DXY has exhibited resilience and formed a new fractal resistance level at 101.83. Traders should be cautious of a potential bearish bat pattern that may emerge above the resistance level.
Technical Report: Impact of CPI Data on SPX500
Date: [May 10, 2023]
Summary: This technical report aims to assist traders in positioning themselves in the SPX500 (S&P 500) market based on the CPI (Consumer Price Index) data that will be issued in a few hours..
We will analyze the potential impacts of the CPI data on the SPX500 and provide insights tailored to traders.
Strong resistance at 4194:
The SPX500 has found the monthly fractal resistance level displayed at 4194 to be a critical pressure point. This level represents a substantial obstacle that the index has yet to overcome. A break above this level would indicate strong positive sentiment and open the door to more upward possibilities.
Formation of the Head and Shoulders Pattern: One significant development in the SPX500 is the formation of the daily fractal support at 4044, which reinforces the previous support level. This formation has the potential to outline a head and shoulders pattern, a classic reversal pattern. However, it is important to note that the pattern’s confirmation relies on the breakthrough of the fractal support.
Breakthrough of Fractal Support: If the CPI data release leads to a breakthrough below the fractal support at 4044, it may signal a bearish sentiment in the market. Traders will closely watch for this potential breakdown, as it could trigger a drop toward the next support level at 3945. This level corresponds to a.618% Fibonacci retracement, indicating a significant potential downside target.
Importance of CPI Data: The CPI data release can influence market sentiment and investor expectations regarding inflation. Higher-than-expected CPI figures could raise concerns about rising prices, potentially weighing on the SPX500. Conversely, lower-than-expected CPI figures may alleviate inflationary pressures and support the market. Traders should monitor the CPI data and assess its impact on market sentiment.
The SPX500 is currently showing the formation of a potential head and shoulders pattern, with the daily fractal support at 4044 serving as a critical level to watch. A breakthrough below this support, especially in response to CPI data, could trigger further downside toward the 3945 support level. Traders should closely monitor the CPI data release, as it can provide insights into market sentiment and potential price movements in the SPX500.
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