In terms of the Nasdaq composite technical analysis, the market started the new year with a bullish bias. The “soft landing” narrative is dominating with inflation data showing moderation and labour market data showing strength. The Fed has also signalled that it will scale back interest rate hikes to a standard 25 bps pace with two or three raises coming up before the Fed ends its tightening cycle.

Although the recent economic data may give some hope for the optimists, the leading indicators have been pointing to a sharp contraction for months. The market is holding on just the labour market strength and this suggests that at the first sign of weakness in the labour market data, everything may crumble.

Nasdaq Composite Technical Analysis

nasdaq composite technical analysis

On the daily chart above, we can see that the market is rallying towards the resistance area at 11500. At the moment this looks like a big range between 11500 and 10200.

The bulls will need to break the resistance to the upside to gain some confidence and target higher highs with the first resistance target at 12250. If the bulls fail to break the resistance and the price falls below the trendline, the bears will regain control and start to target the support zone at 10200.

nasdaq composite technical analysis

On the 1 hour chart above, we can see the current uptrend with supports at 10800 and 11225 depicted by the orange lines. There’s also the blue trendline that will act as support for the bulls and will be a barometer of sentiment for the market: stay above the trendline to keep the bullish bias and stay below to switch to a bearish bias.

nasdaq composite technical analysis

Drilling down to the 15 minutes chart above, we can see that in terms of risk/reward, it’s better to wait for the price to pull back to the trendline before trying longs targeting the resistance at 11500.

There are also Fibonacci retracement levels at the trendline that can offer additional support for the bulls. The bulls will also know quickly if they are wrong because a fall below the trendline will switch the bullish bias to bearish.