Stock Markets Enter Consolidation Mode Ahead of Easter Break

With a shortened trading week due to Easter holidays, financial markets are expected to experience a period of relative calm today.

This pause could offer traders a welcome break after a busy start to April, marked by a flurry of news events that injected heightened volatility into global equities.

US Stock Markets

On Wednesday, Federal Reserve Chair Jerome Powell adopted a cautious yet firm tone in his outlook on US monetary policy, warning that the effects of Trump-era tariffs may hinder progress towards the central bank’s inflation objectives.

In response, President Donald Trump accused Powell of engaging in “political manoeuvring,” hinting at the possibility of his removal.

European Stock Markets

The European Central Bank cut interest rates for the seventh time in the past year on Thursday. ECB President Christine Lagarde signalled that further policy easing remains on the table if economic conditions warrant it.

As markets had largely anticipated a reduction from 2.65% to 2.40%, the ECB’s decision was met with a relatively muted reaction from investors.

S&P 500 Technical Snapshot (US SPX 500 mini on FXOpen)

Charts of both European and American stock indices are currently displaying the formation of a contracting triangle — a technical pattern suggesting a temporary equilibrium between buyers and sellers, with price movements becoming more reflective of underlying market forces.

On the S&P 500 (US SPX 500 mini on FXOpen), this triangle pattern is shaded in grey. Both the ADX and ATR indicators are pointing downwards, reinforcing the narrative of reduced momentum and ongoing consolidation.

From a bearish standpoint, the index remains in a downward channel (marked in red). However, bulls may find some encouragement in the fact that prices are holding within the upper half of that channel.

While the market may seem stable on the surface, the extended holiday weekend could still bring unexpected headlines from the White House. Such developments could disrupt the current equilibrium and trigger a breakout from the triangle formation.

A potential bullish scenario involves buyers mounting a push towards the upper boundary of the channel, aiming to establish the foundations of a new upward trend — illustrated by the blue lines on the chart.

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