US CPI to restore NQ100_m closer to 16,000?
<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a> </strong></p>
<h3>Astute traders would have noticed some interesting price action on the NQ100_m of late.</h3>
<p>After breaking out of an <strong>ascending triangle</strong> which was in formed from 9th June to 11th July ( 23 trading days), current price action sees NQ100_m bouncing off the support area of a <strong>bullish flag.</strong></p>
<blockquote><p><em>A flag is a short channel that usually slopes in the opposite direction of a trend, and is usually a continuation pattern.</em></p></blockquote>
<p>This support area coincides with the former ascending triangle resistance, which is now support.</p>
<p>Worthy of note is the fact that this support area (former ascending triangle resistance) has held the fort since the 3rd of August.</p>
<p>Interestingly, yesterday’s price action also saw the <strong>50-day SMA</strong> on the daily chart act as a dynamic support with a rejection of price at the 15151.3 low to close within the flag pattern.</p>
<p><img decoding="async" fetchpriority="high" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/NQ100_mDaily_3.png" alt="" width="1024" height="768" data-entity-type="file" data-entity-uuid="f6d65e7e-734e-4fce-a5ab-d950c65cee8d" data-src="/s3-static/users/user16/NQ100_mDaily_3.png" /><br />
From a fundamental perspective …</p>
<h3><strong>Tomorrow’s (Thursday, August 10th) US inflation report could be a major catalyst for NQ100_m’s next big move!</strong></h3>
<blockquote><p><em>Inflation is typically measured by the consumer price index (CPI), which measures the change over time in the prices paid by consumers for a basket of goods and services.</em></p></blockquote>
<p>The upcoming print is expected to show that both <strong>headline </strong>and <strong>core CPI</strong> rose by<strong> 0.2% </strong>in July 2023 compared to June 2023 (month-on-month). This would match June’s 0.2% month-on-month readings as well.</p>
<p><strong>However, for the year-on-year figures (July 2023 vs. July 2022), this is where the action may stem from.</strong></p>
<p>The <strong>headline CPI </strong>is expected to tick back higher to <strong>3.3%</strong>, versus June’s 3% year-on-year number.</p>
<p>Meanwhile, the <strong>core CPI</strong> (which excludes more volatile food and energy prices) is expected to moderate slightly down to <strong>4.7% </strong>from June’s 4.8%.</p>
<blockquote><p><em>Looking further out to <strong>Friday, August 11th</strong>, the measures of <strong>consumer inflation expectations </strong>over the next 1-10 years could also influence markets.</em></p></blockquote>
<p> </p>
<p>Ultimately, if these <strong>CPI prints</strong> come in <strong>well below market expectations</strong>, this should signal that the Fed’s rate hikes are having the desired effect, and should further dampen any notion of additional rate hikes for the remainder of the year.</p>
<p>The narrative above should see <strong>NQ100_m’s prices rally </strong>to test and possibly break the flag resistance. <em>(see above chart)</em></p>
<p>If the <strong>flag’s resistance is breached</strong>, the measured move objective would be the distance of the flagpole which is more than <strong>10,000 points</strong> <em>(measuring from 10th Julys low of 14933.8 to 19th, Julys high of 15947.7)</em></p>
<blockquote>
<h3><em><strong>A strong upside breakout may even push this tech-heavy index back closer to the psychologically-important 16,000 mark.</strong></em></h3>
</blockquote>
<p>On the other hand, bears are set to look out for a set of <strong>stronger-than-expected CPI</strong> prints for the NQ100_m to test and possibly <strong>break the flag’s support. </strong></p>
<p>This would mean the past ascending triangles resistance, which is now acting as support at <strong>15270</strong>, would have to give way first.</p>
<p>After that, bears will be targeting the crucial support lines seen at its <strong>50-day SMA</strong> as well as the <strong>lower bound </strong>of this current “flag”.</p>
<hr />
<p><img decoding="async" class="size-full wp-image-54242 alignleft" src="https://www.investmacro.com/articles-analysis/wp-content/uploads/2014/07/Forex-Time-Logo.png" alt="Forex-Time-Logo" width="262" height="90" /><strong>Article by <span><a href="https://www.investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></span></strong></p>
<p><strong>ForexTime Ltd (FXTM)</strong> is an award winning international online forex broker regulated by CySEC 185/12 <a href="http://www.forextime.com" target="_blank" rel="noopener">www.forextime.com</a></p>
Leave a Comment