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FOMC concluded: why US indices remain at risk
5/10TL;DR
U.S. and European equity indices show signs of short-term weakness and potential further downside, though the broader long-term trend remains upward.
KEY POINTS
Nasdaq tests key technical zones
The Nasdaq continues its downward move, approaching areas tied to prior price imbalances. Markets are attempting to “rebalance” gaps left on higher timeframes, with attention on whether key support levels will hold into the monthly close. A confirmed break lower could open the path toward deeper retracement zones considered attractive for longer-term positioning.
Lack of confirmed reversal signals
Despite recent declines, there are no clear technical signals of a bullish reversal in the short term. Price action has not yet produced strong engulfing patterns or structural shifts typically associated with trend changes. This keeps traders cautious, with many অপেক্ষing for confirmation before re-entering long positions.
S&P 500 risks broader correction
The S&P 500 has swept recent liquidity below prior lows and is testing the lower boundary of a compression pattern. A confirmed breakdown could trigger a broader corrective move, potentially targeting monthly imbalance zones. These areas are still viewed by some analysts as favorable for longer-term bullish continuation rather than a structural market top.
Dollar strength remains uncertain
The U.S. dollar is hovering within a broader equilibrium range, with no decisive breakout. Options flow data suggests weakening bearish pressure on the euro-dollar pair, hinting at a possible short-term rebound in the euro. This dynamic may limit sustained upside in the dollar in the near term.
Volatility signals potential market stress
The VIX is showing signs of a possible volatility squeeze, which could precede a spike in market stress. A breakout above key technical bands may coincide with sharper equity declines, potentially marking a short-term bottom if panic accelerates.
Russell 2000 and Dow point to deeper pullback
Both the Russell 2000 and Dow Jones indices are beginning to retrace after recent highs. Technical structures suggest a possible move toward prior monthly lows, with further downside likely if key imbalance zones are broken. This could signal broader market weakness beyond large-cap tech.
European indices face similar pressure
The DAX and CAC 40 are also testing bearish imbalance zones and may continue lower before stabilizing. Analysts expect potential sweeps below July lows, with deeper liquidity targets still untested. Despite this, the medium- to long-term outlook remains constructive if support holds at lower levels.
Oil and macro risks remain in focus
Crude oil prices are consolidating below key resistance, but untested highs suggest potential for a future breakout above $95. Geopolitical tensions, particularly involving the United States and Iran, could act as catalysts. Higher oil prices would likely add pressure to equity markets.
CONCLUSION
Global equity markets are entering a phase of heightened uncertainty and potential short-term downside, but current signals still align more with a corrective phase than a definitive end to the broader bull trend.