Yesterday, the Nasdaq Composite finished another day basically flat as the market continues to consolidate ahead of the US CPI report. As previously mentioned, another hot report could change the near-term Fed’s strategy and trigger a hawkish reaction putting more pressure on the stock market. On the other hand, data in line with expectations or even lower will likely lead to a positive risk sentiment driving the market to new highs.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite has been diverging with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. The price recently broke out of the rising wedge which opened the door for a bigger correction into the 14477 level. The price has been consolidating around the highs for quite some time as the market participants await the US CPI report today to decide where to go next.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been hovering around the critical 16206 level. If the price were to continue lower and fall below the 16206 level again, we can expect the sellers to pile in more aggressively to extend the drop into the first support level at 15929. That’s also where we can expect the buyers to step in with a defined risk below the support to position for a rally back into a new all-time high.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the price getting rejected several times from the black counter-trendline except the fakeout on the 4th of April. The price is probing above the counter-trendline again although this should be discounted as just noise ahead of the US CPI release. A break above the 16350 level will see the buyers piling in more aggressively to extend the rally into a new all-time high. Conversely, a break below the 61.8% Fibonacci retracement level will likely trigger a selloff into the 15929 support.
Upcoming Events
Today we have the US CPI report which will likely decide if the Fed is going to delay rate cuts further. Tomorrow, we get the US PPI and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the University of Michigan Consumer Sentiment survey.
