Core CPI hits two-year low, but how do the markets react?

In October, inflation showed no change compared to the previous month, signaling a potentially positive development in the U.S. economy. This stability in prices offers a hopeful indication that the persistent high prices might be loosening their grip, potentially allowing the Federal Reserve to reconsider raising interest rates.

According to seasonally adjusted figures released by the Labor Department on Tuesday, the consumer price index, which gauges a wide range of commonly used goods and services, saw a 3.2% increase from a year ago, despite remaining unchanged for the month. Economists surveyed by Dow Jones had anticipated readings of 0.1% and 3.3%, respectively.

This follows a 0.4% increase in the headline CPI in September.

Excluding volatile food and energy prices, the core CPI increased 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual level was the lowest in two years, down from 4.1% in September, though still well above the Federal Reserve’s 2% target. However, Fed officials have stressed that they want to see a series of declines in core readings, which has been the case since April.

The flat reading on the headline CPI came as energy prices declined 2.5% for the month, offsetting a 0.3% increase in the food index. It was the slowest monthly pace since July 2022.

BTC-USDT 4-hour timeframe

It is noteworthy that BTC did not react to the positive CPI numbers, while NQ and SPX immediately surged higher. Currently, BTC is exhibiting weakness, moving counter to other markets. BTC is currently testing the old range high as support. Typically, after a breakout, you would expect to see price expansion, and a retest of the range high is considered a sign of weakness. If BTC falls back below the range high of $35.150, I anticipate a search for liquidity, possibly testing the range EQ and even the range low.

ETH-USDT 1-day timeframe
The ETH chart looks interesting on the daily timeframe due to the equal highs it has established. From a liquidity game perspective, it would make sense for the price to test these equal highs. Therefore, the green daily demand zone in the $1850-1900 range can be utilized to scale into long positions. This corresponds to a liquidity grab on BTC-USDT.

DXY 1-day timeframe
I am analyzing the DXY chart based on a range. What immediately stands out is that the price has made a deviation at the bottom, followed by a strong price movement towards the range high. Above this range high, another deviation occurred before the price fell back into the range. After the bearish retest of the range high, the price accelerated southward, with CPI playing a significant role. Considering the price action and keeping the principles of range trading in mind, I anticipate that DXY will test the range EQ of $103.4.

NQ 1-day timeframe

 NQ is stronger than SPX at the moment, so my focus will be on this pair. As mentioned earlier, indices have reacted extremely positively to yesterday's CPI figures, resulting in a +2% increase on NQ. With this rise, the price is approaching the liquidity level of 15930. If the price provides retracements today, I will consider opening long positions with a target of 15930.

The markets are generally doing well, while BTC is lagging behind. This is not surprising, considering the strong run it has had recently. Retracements should be seen as opportunities, and these are precisely the moments to react if you are bullish on BTC.

We’re back on Friday with the altcoin-update! See you then! 

Previous Post

It's time to share


We have created several packages and programs for our clients to enroll in and receive personal guidance on their crypto investments.

Discover more