On the daily chart below for the Nasdaq, we can see that we got the first negative close last Friday after several big positive days. The culprit was a negative news about debt ceiling talks being at a stalemate. We can also see that the rally stalled at an old swing level that should act as resistance going forward.

The Nasdaq should still have an upward bias as the bullish flag pattern is still playing out perfectly. As things stand, we may keep on trading on the classic “buy the rumour” playbook as the market expects that eventually the debt ceiling will be raised. The target of the bullish flag is the 13000 area with the 13174 high being a nice level to look at.

Nasdaq Technical Analysis

On the 4 hour chart below, we can see that the month long range beneath the strong 12274 resistance was breached and once the price retested the broken resistance turned support, the Nasdaq rallied strongly to the next resistance at 12660. We now have a trendline that will act as support in case the Nasdaq makes a deeper pullback to the downside.

On the 1 hour chart below, we can see that in case we get a pullback from here, the downside should be limited for the Nasdaq. In fact, we have a minor trendline and Fibonacci retracement levels that will act as support for the buyers looking to position for another rally towards the 13000 level. On an even deeper correction, the buyers should be leaning on the major trendline and the 12274 support as the last line of defence.

The sellers, on the other hand, are likely to pile in if the Nasdaq breaks below the minor trendline targeting the major one. If the price falls below the major trendline, then the sellers should really come in aggressively and target the 11900 support.