US inflation data drives rebound for Dow, Dax and Nikkei 225
Indices have staged a rebound after their wobble in the wake of yesterday’s US inflation data.
Dow surges from one-month low
The Dow Jones index briefly hit a one-month low yesterday, slumping below 40,000, before staging a huge rebound that put it back above the 50-day simple moving average (SMA).
This continues to reinforce the view that the price is on course back to the 41,500 highs seen in late August.
This view remains in place unless we see a close back below the 50-day SMA, which may then indicate a more substantial pullback is underway, aligning with September and October’s weaker seasonality.
Dax recovers 18,500
The Dax 18,200 level continues to hold as support, and with the price pushing above 18,500 in early trading the pullback from the September high may have been halted.
Further gains target the 19,000 level once more, with the bullish short-term view in place unless we see a reversal back below 18,200, which might then trigger a pullback towards the 200-day SMA (currently 17,851).
Nikkei 225 rebounds from Wednesday low
Japanese yen weakness following the US inflation report gave the Nikkei 225 the strength to rebound from the lows of the session.
If a higher low has formed then the price may push back towards the 39,000 highs seen at the beginning of September, while a longer-term bullish view supports a push back to the July highs at 42,485.
Sellers will want to see a reversal that closes back below 35,000.
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