Last Friday, the Nasdaq Composite extended the pullback from the highs reached after a strong rally triggered by the FOMC decision. This might have been just a profit-taking move from overstretched levels as nothing has changed in the data as we got strong US Jobless Claims figures and good US PMIs. Looking ahead, we are approaching a new month where we get the key economic data including the US CPI. The path of least resistance though remains to the upside until the labour market cracks or the reacceleration in inflation gets confirmed and we get some hawkish repricing in interest rates expectations.
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. We continue to trade inside the rising wedge, so if the price were to break below the trendline, the sellers will have much more conviction to look for new lows with the base of the wedge at 14477 being the ultimate target.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the bottom trendline where they will find the confluence of the red 21 moving average and the 50% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking lower to start targeting new lows.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support zone around the 16370 level where we can find the confluence of the minor trendline, the red 21 moving average and the 38.2% Fibonacci retracement level. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to position for a break below the major trendline with a better risk to reward setup.
Upcoming Events
This week is going to be shortened by the US Holiday on Friday. Tomorrow, we have the US Durable Goods and Consumer Confidence reports. On Wednesday we have Fed's Waller speaking. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude with the US PCE report and Fed Chair Powell.
