The market is still trading based on the “soft landing” narrative as inflation moderates and the labour market remains tight for the Nasdaq Composite. Yesterday, the market once again cheered on the release of the Employment Cost Index (ECI) for Q4, which missed expectations and pushed back further on the fears of a wage price spiral.
In fact, we’ve been seeing moderation in wage growth for months and this should be a welcome news for the Fed as that’s one of the biggest worries they had. Today there’s the FOMC Policy Announcement where the Fed is expected to hike by 25 bps followed by Fed Chair Powell Press Conference where he’s expected to sound hawkish.
Given that the market has already priced in such outcomes, it’s unlikely to see very big moves and we should get back to trading economic data on Friday when the NFP report gets released.
Nasdaq Composite Technical Analysis
On the daily chart above, we can see that the price managed to reach the top of the range. This resistance hasn’t been broken since September 2022 and the bulls will need a good catalyst to target new highs. In case the bullish sentiment continues, the next targets are the resistance at the 12274 and the resistance at 13191.
On the other hand, if the price fails to keep the bullish momentum going, the bears may regain control and target the bottom of the range at 10200.
On the 1 hour chart above, we can see that the price is trading in a rising channel with the near term support at 11399, which has also the bottom of the channel as further confluence. If the bears manage to break below that zone, they should have the upper hand and target the support at 10200.
Drilling down to the 15 minutes chart above, we can see that the price is now right within the resistance area at 11500 and 11600. The price action may be choppy today as we head into the FOMC Policy Announcement.
Before that we have other important economic reports with the ISM Manufacturing PMI and US JOLTs at the top of the list. The levels are defined though: stay above 11689 and the bulls are in control, on the other hand, get below 11399 and the bears will regain control.
