Source: PaxForex Premium Analytics Portal, Fundamental Insight
The US Monthly Budget Statement for July is predicted at -$254.3B. Forex traders can compare this to the US Monthly Budget Statement for June, reported at -$66.0B.
Today’s economic calendar is light, and traders may focus on the New York Federal Reserve 1-Year Consumer Inflation Expectations Index. A move down from the 3.0% reading posted in July could please bulls. A stagnant reading or an increase in inflationary pressures similar to that in the EU or China could provide bears the fuel to extend the most recent correction in US equity markets.
Volatility could stay high for the next few weeks as traders assess more inflation and labor market data. Some view last week’s bounce as a bull trap, and the outlook for the economy is weakening. Tomorrow’s PPI data and Wednesday’s CPI data could move markets, but traders may wait for the August NFP report, released on the first Friday in September, for more clarity.
The forecast for the SP500 remains cautiously bearish after this equity index bounced off its horizontal support area into its narrowing Ichimoku Kinko Hyo Cloud. After completing a bearish crossover, the Tenkan-sen and the Kijun-sen have flatlined, and price action trades between them. The Senkou Span A of the Ichimoku Kinko Hyo Cloud moves lower and narrows the cloud with the Senkou Span B flat. A bearish crossover could follow, which would add more selling pressure. Traders should also monitor the CCI after posting a lower low in extreme oversold territory followed by a breakout. This technical indicator is losing upward momentum, and a reversal could start the next leg lower. Can bears regain complete control over the SP500 and force price action into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the SP500 Index remain inside the or breakdown below the 5,330 to 5,385 zone, PaxForex recommends the following trade setup:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 5.350
- Take Profit Zone: 5.000 – 5.090
- Stop Loss Level: 5.435
Should price action for the SP500 Index break out above 5,385, PaxForex recommends the following trade setup:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 5.450
- Take Profit Zone: 5.500 – 5.540
- Stop Loss Level: 5.385
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