Lower Inflation Data Helps to Maintain the Positive Sentiment
10 November 2022
Wednesday and the first half of Thursday brought us a little cooldown of the sentiment on the stock market. Indices remained calm, close to mid-term highs, awaiting the US’s inflation data and the final results from the elections.
The Dow Jones didn’t stop the recent upswing in a random place. The price perfectly took five on the upper line of the wedge – formation, which describes the whole correction of 2022.
By the way, a small recap of how the upswing started. The Dow created a beautiful double bottom formation (blue) right on the 38,2% Fibonacci, which was a pre-Covid high – a really marvelous coincidence.
Ahead of the inflation data, the main sentiment was definitely positive, even despite yesterday’s strong bounce on such an important resistance.
Then the inflation data came in soft and sellers were left completely without an argument, the Dow Jones surged immediately, passing the upper line of the wedge.
Now, we have a decisive battle. The price closing a day above the upper line of the wedge would bring us a proper buy signal, probably a start of a new bullish trend, on the other hand, the price retracing a lower after such a gift from the CPI would mean a bigger bearish correction.