FTSE, DAX and Nasdaq surge in the wake of the US CPI release

FTSE 100 breaks through key resistance zone after US CPI decline

The FTSE 100 has managed to push sharply higher in the wake of yesterday’s US CPI reading, with the steep decline across both headline and core inflation helping lift bullish sentiment throughout financial markets.

Calculating when the next period of downside comes into play is going to be the million dollar question. However, the size of any upside for the FTSE is likely to be lesser than that seen in the US, with the resurgent GBP/USD lessening the gains for the index.

Meanwhile, today’s -0.6% reading for the September GDP figure does highlight the ongoing fears of economic collapse over the coming year.

With that in mind, while short-term upside looks likely, such a move is expected to be less dramatic as we head back up into the next descending trendline.

DAX spikes up through key resistance to end downtrend

The DAX saw a more dramatic day of gains yesterday, with the index recovering over double the amount of ground as the FTSE 100.

With inflation turning sharply lower in the US, there is hope that we could be closer to a notable pivot in monetary policy. However, a number of things are worth considering. Firstly, US CPI now stands at 7.7%; someway off the 2% target. Also, eurozone inflation currently stands at 10.7%, showing precious few signs of slowing let alone reversing. We are seeing bullish sentiment take hold nonetheless, with that positive mindset likely to extend for the time being.

The break up through 13976 resistance brings an end to the 2022 trend of lower highs, signalling the expectation of a wider retracement of the entire 2022 move.

With that in mind, any move up through this trendline resistance would point towards a potential move into the likes of the 14584 and 15239.

A break through the 13019 swing-low would be required to bring the bears back into play.

Nasdaq spikes into notable resistance level

The Nasdaq was expected to be the most volatile as the bearish trend kicks in once again, but that also applies to the reversal we have seen yesterday.

The 7% spike seen in this index yesterday has taken us up into the 11686 swing-high, with a move up through that level bringing about expectations of another push higher for the index.

The wider downtrend would therefore come into play, with the potential for a move into the likes of trendline, Fibonacci, and simple moving average (SMA) resistance.

For today, the question is whether we can push convincingly through 11686 to bring that next wider rebound into play.