Market Overview:

Today’s session was driven by the release of the U.S. Consumer Price Index (CPI) report, which came in hotter than expected:

• CPI YoY: 3.0% (vs. 2.9% forecast, 2.9% prior)
• CPI MoM: 0.5% (vs. 0.3% forecast, 0.4% prior)

The higher inflation print led to reduced expectations of Federal Reserve rate cuts, shifting market sentiment. Traders repriced Fed easing, pushing the first expected rate cut from September to December. In response, U.S. Treasury yields surged, with 5- to 10-year rates climbing at least 10 basis points.

Key Price Action & Technical Levels:

• Early Market Reaction: Initial downside pressure followed the CPI release, fulfilling multiple key downside targets:

  • NQ Average Decline: 21,542 level tested and fulfilled
  • 10-Day ATR Target: 6,023 hit
  • Previous Zone of Interest: 6,020 – 6,015 engaged

• Intraday Dynamics:

  • Buy Response off 6,023: Price rebounded back to 6,057 (prior low), before rejecting back to the Open Range high at 6,035.
  • Afternoon Strength: Positioning shifted, with long bias maintained into the afternoon session, culminating in a 6,075 closing price.
  • Key Retests: The 6,070 level represented a retest of the Initial Balance (IB) high, confirming rotational price action.

• Market On Close (MOC) Positioning: Traders squared positions into the closing rotation, with MOC ending flat.

Educational Takeaways:

1. Market Expectations vs. Reality – The hotter-than-expected CPI disrupted the assumption of near-term Fed rate cuts, demonstrating the importance of staying adaptable when new macroeconomic data is released.
2. Target Fulfillment & ATR Awareness – Understanding Average True Range (ATR) dynamics helped traders anticipate key inflection points like 6,023. When ATR-based targets are met, markets often consolidate or reverse.
3. Zone-Based Trading – Identifying prior zones of interest (6,020 – 6,015) as key areas where price may react allows for structured trade planning.
4. Price Rotation & Liquidity Areas – Observing market structure through Initial Balance, Open Range, and Midpoints provides insight into where two-way trading might occur.
5. Macro-Market Correlation – The reaction to CPI showed direct relationships between inflation data, rate expectations, yields, and equity prices—a crucial lesson for traders looking beyond just price charts.

Conclusion:

Today’s session was a textbook example of how macroeconomic data influences price action, leading to target fulfillment, responsive buying, and structured rotations. By aligning technical levels with fundamental catalysts, traders can enhance their decision-making process and better anticipate market movements.