Following the miss across the board in the US CPI report, the market is increasingly confident that we are heading towards a soft landing. Such expectations are also supported by the strong labour market, as we confirmed again by the US Jobless Claims last Thursday, and the rising consumer sentiment, as seen in the University of Michigan report last Friday. As long as the labour market continues to hold, we are likely to see new highs for the Nasdaq Composite.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the buyers kept leaning on the red 21 moving average to position for more upside and eventually succeeded as the US CPI missed expectations and led to a strong rally. The Nasdaq Composite should now be eyeing the 14649 level where we should see strong sellers stepping in.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the Nasdaq Composite broke out of an ascending triangle patter. Generally, a breakout on either side leads to strong momentum in the direction of the breakout, so the buyers have also this factor stacked in their favour. At the moment we are seeing a pullback from overstretched levels as the price was too far from the blue 8 moving average, and in such instances, we can generally see some consolidation or a pullback into the moving average before another strong move.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have two possible levels where the buyers may lean on to:
- The 38.2% Fibonacci retracement level near the 14000 level.
- The 61.8% Fibonacci retracement level near the previous resistance now turned support.
The sellers, on the other hand, should wait for the price to break below the 13800 level before piling in and extend the fall into the 13174 support.
Upcoming Events
This week there are only two notable events: the US Retail Sales tomorrow and the US Jobless Claims on Thursday. Given the sentiment in the markets, we are likely to see a big selloff only if the data misses expectations by a big margin as a little miss should just be an opportunity to buy the dip. Conversely, higher than expected data should reinforce the soft-landing narrative and lead to new highs.
