- You can see that we did pull back just a bit during the early hours on Tuesday, but it looks like Wall Street is trying to power higher.
- Keep in mind that the CPI numbers come out on Wednesday and that of course will have a certain amount of influence on this market, but I think given enough time, we do break higher.
The Federal Reserve is likely to cut rates later in the year and it does seem like traders on Wall Street are betting on that. It is reflected in the stock market. I think in the short term though, we need to look at the $17,775 level underneath as a significant support level, while the $18,500 level above is a significant resistance barrier.
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We may bounce around in this area, but obviously CPI numbers could cause some type of major shift at the moment. I think it's a market that's trying to work through a lot of excess froth and it does make a certain amount of sense that we consolidate for a while. After all, we've been in a strong uptrend for several months now.
Potential Technical Support
The 50 day EMA sits underneath it and continues to offer support. So therefore, I think a lot of traders will look at that as a potential bounce just waiting to happen as well. But either way, I have no interest in shorting this market. I think it is probably only a matter of time before we continue to see buyers on dips and the upcoming earnings season could be one of the major drivers.
Earnings season has been a bit of a pleasant surprise for a while on Wall Street, and I think we may continue to see more of that. Regardless, earnings will only have so much of an effect as it seems like most people out there are more or less focused on what the Federal Reserve may do, so it’s possible that “bad news is good news” fairly soon as traders will continue to hope for loose monetary policy.
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