Falling Flag Pattern
The NAS100 has pulled back to the 50% retracement of its last impulse move off the December low. This price action may be corrective in nature, charting a falling flag pattern (green parallel lines). Flags are categorised as continuation patters. If they complete, the next impulse leg is expected to be in the same direction of the previous impulse leg. I.e., for falling flags, we expect the next leg to be higher.
One way to monitor the progress of the NAS100 is by its price relative to its zones. Yesterday, the index moved out of its weak zone between the lower blue and red bands, into its neutral area between the two blue bands. This is a show of relative strength. However, if the above pattern is a true falling flag, we will need to see the index make its way into its bullish zone, between the upper blue and red bands, and hold there.
A calm has been restored to the market following the failure of SVB. The key event for today will be retail sales, out at 12:30 PM GMT. Traders will also be interested in the PPI data released at the same time. Yesterday's CPI came in at 6% y/y, which was lower than the previous 6.4% y/y. Barring any surprises, the market expects the Fed to hike by 25 bps on 22 March.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.