Transcription
New historical high on the indices, potentially what we call an ATH on the NASDAQ, potentially on the S&P 500 as well. That's what we're going to analyze today, CPI day. Inflation in the United States, that's going to be extremely important too. We'll also take a quick look at the dollar and gold, and the impacts that tariffs between the United States and China can have.
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So, coming to the Nasdaq, we can see that we are approaching the ATH. This was our bias this week since we saw the liquidity grab here. The push, we saw together that there were probabilities, but it wasn't the most probable move to come back below. The idea was to return to the discount zone of this movement here. And so we can see that we have returned to the discount zone. We have swept the low of Monday, which allowed us to grab liquidity and head towards our ATH, what we call here the buy-side liquidity. And so, we will likely trigger the ATH. CPI day, it's Friday, price delivery day. Very often, objectives are met. So, in my opinion, that will be the objective, and I remind you that this will really be the test zone. We are on an order block here. The question is, will it become a breaker block? If so, that would be an excellent continuation signal, and therefore the indices could continue.
What would make the indices continue to rise? It's the fact that the VIX has finished its rebound, and if this fair value gap zone here is not maintained, we will go to a new low, probably heading towards the 2024 low. And that would mean that volatility will continue to decrease, and low volatility is very often positive for a bullish continuation of the US indices. And so, this is what could potentially cause the Nasdaq to continue to rise, if, of course, we form this breaker block. There is important news. Well, today there are the inflation figures. We'll go and see, we'll go and see the expected figures a bit. We can see that we have 3.1% expected figures today. But the most important thing is to observe the market's reaction to interest rates. For example, if we have 3% which is below the expected figures, theoretically, that should increase the probabilities of more rate cuts by January 28th. So, we would be, for example, at our 4th rate cut. I remind you that we have already cut rates once, and we should cut them again at the next FOMC on October 29th. There is a 99% probability of a rate cut, and also on December 10th, 2025, the market expects a 92% probability of another rate cut. And for January 2026, we currently expect a 49% probability of a rate cut. If the inflation figures are good, that could further increase the probabilities of interest rate cuts. If the figures are bad, obviously, that will decrease them.
What is very important for me is especially the tariffs, it's not necessarily the FOMC. Now, regarding the FOMC, what we can expect is whether the Fed will talk about the end of QT. Powell has already spoken about us approaching the end of the Fed's balance sheet reduction, so the end of QT. But it will be important to see if it will really be implemented or not. And when, finally, it will be implemented, but the question is when? Perhaps we will learn a little more on October 29th during the FOMC. And also, the most important news is the agreement between the United States and China because don't forget that tariffs will create inflation. But the question is, what percentage of tariffs will there be on China? If there are high tariffs, there will potentially be an increase in inflation, and that needs to be taken into account because it will automatically decrease the probabilities of rate cuts, and that would be a problem. It could even postpone the end of QT. So all of this will be priced in by risk assets.
So, to do this, I think we will come and clear the ATH. Anyway, it's almost certain now. Oops, I clicked on the wrong tab. I was right, it's almost certain that we will trigger the ATH, but the question is, is it an order block rejection and a bearish reversal, or is it a breaker block? And while the VIX goes to find the 2024 low, we continue to rise calmly. Well, I would favor the breaker and the calm continuation with perhaps turbulence afterward because I remind you that the January barometer always announces turbulence. It could just come potentially later, perhaps during the quarter, while the VIX hits its lows. So I think we still have a little room, but we must still be cautious about this order block.
On the S&P 500 side, well, it's the same thing, heading for the ATH, probably here on the order block as well. We had noted the IF IFVG here which was maintained. So, same daily fair value gap that formed, we maintained it, bullish continuation. So we expect a new ATH. We had come to purge the liquidity below Monday's low right here. Which allowed us to launch a new bullish phase here, heading towards the ATH. So, for me, the bias remains bullish as long as we haven't made new highs on the weekly chart as well. Here, we will need to pay attention to this liquidity grab, to see if there will be a rejection or not. And for now, monthly, we are indeed validating an immediate rebalance, which is rather positive for continuation. Theoretically, the VIX confirms it. So, we could expect a breaker block on the indices and perhaps corrections that will come later. But for now, yes, it still seems well underway for a bullish push. Unless, of course, there are high tariffs or a complete lack of agreement between the two countries, and therefore, from November 1st, high tariffs would increase inflation, and that would be a huge bearish catalyst for the markets. That will be observed.
Regarding the dollar, well, the dollar is waiting for exactly the same thing. Will the tariffs be high? Yes. No. If yes, high inflation. And therefore, if high inflation, then rate cuts are more complicated, therefore a strengthening dollar. And then we could go for the W bottom structure, potentially, and then mark slightly deeper retracements, why not, and start our rebalancing of previous zones. However, if we have tariffs that are quite low, well, theoretically, that could keep inflation quite controlled, and at that point, the dollar could just go and seek its previous quarter's high before marking a turning point. So, that's what I would observe. You know my bias. I still think the dollar is bullish long-term. Personally, as long as we maintain the annual FVG here, if we were to break this annual fair value gap, then yes, I would expect a market reversal and a truly bearish dollar for several years. But that's not the case. So, for me, as long as this fair value gap is maintained, I expect the 2022 high to be broken, perhaps next year or in 2 years, but I think it will eventually happen. And potentially, for me, we are really structuring a bottom here. The only question I ask myself is, will we revisit the annual low at the beginning of 2026 before truly marking our bottom definitively? But I think we are in the formation of this bottom. So, that remains to be observed, of course.
And on the gold side, to finish this review today, we can see that we indeed have our reversal candle with the break of the last bullish candle, the daily fair value gap which confirms the order block. So, there is a consolidation forming. We are working the last bullish fair value gap. If it is broken, in my opinion, we will go and seek the weekly fair value gap, so below 4013 dollars. So, these will be zones to observe for me on gold. If you are a swing trader, I said again in these extension zones, you need to take profits. I don't think we are very, very far from having marked our top or at least the beginning of a consolidation, that's more my bias. And then we'll see if it reverses the market or not. But in any case, there are clear signs of consolidation, or even slightly deeper retracements for a rebound afterward, I think to come back and work this order block. For me, that would be very unlikely. After, it's possible, but that we completely go against this movement. I think we will more likely witness a rebound, a consolidation, and perhaps a distribution phase if we want to mark a reversal and a retracement of this zone, for example. After, anything is possible, markets are quite volatile and irrational, but well, I think there would still be more probability of consolidating.
After, from my point of view, regarding the bias, well, you always have to aim for sells or buys. Here, we can see that we have left relative equal highs. That would be a good future zone potentially. So, if you have a bullish bias, well, why not observe the sweep of this low? Why? Because in fact, it could very well come and sweep this low but while closing within the fair value gap to then come back and visit the daily highs we left just here. So, in short, do something like this. So, that could potentially be a bias idea to develop if there are signals under the sell-side here to position ourselves, to take the opposite view because theoretically, it remains a range. We could see consolidation, manipulation, and perhaps an expansion to come back and re-work the fair value gap zones we left on the previous bearish leg.
I'll stop here for today. I hope you enjoyed it. If so, don't hesitate to bombard the thumbs up, subscribe, leave a little comment. Thank you very much to those who play along. I remind you of all the links in the description box to train with us for free. I'll stop here. We'll meet on Monday for a next macro review or later on the YouTube channel.