The focus today will be the Consumer Price Index (CPI), a market-moving inflation report from the United States. I am expecting high volatility.
Although the data is unpredictable, we can sometimes gain a bias from chart analysis. It would be wise to look at DXY (the USD Index).
DXY (USD Index) - buyers returned close to the 61.8% retracement level of 101.92. That would suggest we are currently within the corrective BC leg to the upside. Bespoke resistance is located at 103.26. The channel top is located at 103.43. This chart formation would suggest a higher-than-expected inflation print. That would be temporarily negative for US indices.
US30 - the daily chart highlights a breakout of an ending wedge formation. The measured move is located at 37,130. We have seen mixed and volatile trading for the last four sessions with spikes seen in both directions. This highlights indecision up to the inflation report. The most important factor in this time frame is the fact that the 161.8% extension and 261.8% extension line up with substantial support zones. I am looking for a bearish Elliott Wave count (5 waves) to complete after the corrective second wave.
The one-hour chart highlights a stalling in bullish momentum close to the 78.6% pullback level of 38,848. This would suggest we are forming a bearish Butterfly pattern. The next leg is expected to be the corrective BC leg to the downside. This pattern will be completed at 39,097.
Conclusion: I expect negative price action for the US30 over the inflation data. It should be noted that the system trade setup would be to sell the completion of the Butterfly formation in the coming days at 39,097. This level (39,097) is also the projected reverse trend line resistance of the daily wedge breakout.
Resistance: 38,848 (78.6%), 38,957 (swing high), 39,097 (Butterfly and reverse trend line)
Support: 38,502 (March 7 base), 37,979 (bespoke and 161.8%), 37,130 (measured move and 261.8%)
Although the data is unpredictable, we can sometimes gain a bias from chart analysis. It would be wise to look at DXY (the USD Index).
DXY (USD Index) - buyers returned close to the 61.8% retracement level of 101.92. That would suggest we are currently within the corrective BC leg to the upside. Bespoke resistance is located at 103.26. The channel top is located at 103.43. This chart formation would suggest a higher-than-expected inflation print. That would be temporarily negative for US indices.
US30 - the daily chart highlights a breakout of an ending wedge formation. The measured move is located at 37,130. We have seen mixed and volatile trading for the last four sessions with spikes seen in both directions. This highlights indecision up to the inflation report. The most important factor in this time frame is the fact that the 161.8% extension and 261.8% extension line up with substantial support zones. I am looking for a bearish Elliott Wave count (5 waves) to complete after the corrective second wave.
The one-hour chart highlights a stalling in bullish momentum close to the 78.6% pullback level of 38,848. This would suggest we are forming a bearish Butterfly pattern. The next leg is expected to be the corrective BC leg to the downside. This pattern will be completed at 39,097.
Conclusion: I expect negative price action for the US30 over the inflation data. It should be noted that the system trade setup would be to sell the completion of the Butterfly formation in the coming days at 39,097. This level (39,097) is also the projected reverse trend line resistance of the daily wedge breakout.
Resistance: 38,848 (78.6%), 38,957 (swing high), 39,097 (Butterfly and reverse trend line)
Support: 38,502 (March 7 base), 37,979 (bespoke and 161.8%), 37,130 (measured move and 261.8%)