During the holidays we didn’t get much on the fundamentals side except the news about full China reopening. This may have both positive and negative implications.

On one hand, it may help in the short-term with global growth, but on the other hand, it may also increase inflationary pressures and force the Fed to hike more than expected.

We will see how the market will take it, but the risks are more skewed to the downside because in either case, the Fed will make sure to hammer economic activity and avoid another inflationary wave. So, in the end this should be taken as either a neutral or negative development.

Nasdaq Composite Technical Analysis

On the technical side as you can see in the daily chart above, the price has been on a steady fall as the Fed made clear that they will continue with their tightening “until the job is done”.

The price broke out to the downside through the strong support area in the 10950 region and continued the sell off during the holidays with some pullbacks along the way.

The price almost reached the October low at 10096. That is the next level to break on a continuation of the bear market.

On the 1-hour chart above, we can see that the price has been losing selling momentum forming a falling wedge pattern, which is a reversal signal. You can also notice the divergence between the RSI and the falling wedge.

This chart pattern is divergent in nature and the first target on a pullback is generally the top of the pattern, which in this case is at the 10750 level. This should be just a corrective move and the price should resume the downtrend after testing that level.

Drilling down to the 15-minutes chart above, we can see how the price broke out of the wedge and run to the first swing level resistance at 10503. Once the price breaks that level to the upside, we can expect the ultimate run to the 10750 target.