The Nasdaq Composite yesterday rejected the key resistance around the 13700 level as we got another confirmation of a weakening US labour market with a further increase in Continuing Claims. Moreover, Fed Chair Powell delivered what was perceived as a more hawkish than expected speech as the Fed wants to keep another rate hike on the table. Late in the day, we also got one of the worst 30yr bond auction in history that sent Treasury yields higher and weighed on sentiment.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite got rejected from the key resistance around the 13700 level where we had also the confluence with the trendline. The rally was overstretched anyway as depicted by the distance from the 8 blue moving average, so a pullback is unlikely to scare the buyers at this point.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the sellers leant on the resistance with a defined risk above it to position for a drop back into the lows. The first support for the buyers stands around the broken black trendline where a fall below it should trigger another bearish wave. The buyers will need the price to break above the 13700 resistance to start targeting the high at 14450.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been diverging with the MACD right into the key resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. We indeed got a pullback, which should continue into the support zone around the broken black trendline highlighted by the green box. If the price breaks below the support, a reversal would be confirmed, and the sellers will pile in with even more conviction.
Upcoming Events
Today the only market moving event will be the release of the University of Michigan Consumer Sentiment report.
