Nadaq 100 futures (CME: NQ) undid a rally kickstarted on Tuesday on the back of stable inflation rates in the U.S. Fears of an aggressive rate hike by the Federal Reserve dissipated, and bullish traders showed face, raising the index by 2.37% for the day.  

Wednesday opened with traders riding on a new wave of panic over the banking sector’s recent massive failures in Silicon Valley and Signature Bank. Panic was restored following Credit Suisse’s “material weakness” announcement in its reporting.   

The U.S. PPI, Retail sales and Labour market reports will be the week’s following highlights as traders determine whether inflation is genuinely on the path to cooling down. With the Fed’s interest rate decision looming, signs of inflation or a slowdown will be highly sensitive to markets.  

Technical 

A plunge in volumes resulted in a sideway consolidation forming a rectangle pattern in the early hours of Wednesday trading. The Nasdaq 100 futures’ short-term rally was undone by supply-side momentum entering the market, causing a high-speed breakout below the rectangle consolidation pattern. Price action was led into support at the 12169.50, while resistance was established at the 12369.75 level.  

Bulls will likely earmark the 12369.75 level as a take-profit level if they look to enter the market from support at the 12169.50 level. Alternatively, a high volume breakout below the 12169.50 level could indicate the market’s intention to take the index further into the downside. Bears will look to the 11919.50 level with interest in a bear case.  

Summary

The banking sector crisis continues to be the main driver of the markets, as traders are susceptible to anything pointing towards risk. Along with today’s U.S PPI and retail sales, traders will be looking to gauge whether inflation is slowing down, which could benefit equities as the need for aggressive rate hikes wanes.  

Sources: Nasdaq, TradingView