Last week the Fed kept interest rates unchanged as expected while striking a hawkish tone via the Dot Plot. In fact, the Fed not only sees another rate hike by the end of the year, but also much less rate cuts by the end of 2024. Fed Chair Powell has also admitted that the soft-landing scenario is not his base case at the moment and stronger than expected economic data may require additional tightening. For now, the economic data remains strong with Jobless Claims crushing expectations last week, which is not what the Fed wants to see.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that we had a big selloff following the FOMC meeting and the Nasdaq Composite has now reached a key support zone around the 13174 level where we have the confluence with the major trendline 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 the highs.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the Nasdaq Composite broke out of the bearish flag defined by the minor counter-trendline, and fell all the way down to the support level. The target for the pattern is generally the equal extension of the first leg which stands roughly around the major trendline. At this point, the sellers will want to see the price breaking below the trendline to pile in with even more conviction and extend the fall into the 12274 support.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that in case we get a bounce around the support or the trendline, the sellers will have an opportunity to sell the pullback around the black trendline where they will have the confluence with a previous swing level, the Fibonacci retracement levels and the red 21 moving average. The buyers, on the other hand, will want to see the price breaking above the trendline to invalidate the bearish setup and position for a rally.
This week is pretty bare on the data front with just a couple of notable economic releases. Tomorrow, we will get the latest US Consumer Confidence report while on Thursday we will see again the US Jobless Claims data. On Friday, we conclude the week with the US PCE data.