On the daily chart below, we can see that once the Nasdaq managed to break above the key 12274 resistance, it was almost a non-stop rally into the bullish flag pattern target at the 13000ish level. The next big resistance is at the 13174 level and it’s going to be hard for the sellers to fight the momentum if the Nasdaq breaks above that high.

Last Friday’s rally was caused by positive news on the debt ceiling deal that made the market to expect a possible deal over the weekend. Sure enough, the deal was announced yesterday. What we might see now is the classic “sell the fact” scenario where the market reverses once the expected outcome is confirmed.

Nasdaq Technical Analysis

On the 4 hour chart below, we can see that 13000 target was hit last Friday. What happens next will depend on the data. It’s likely that we will keep on seeing dips being bought as long as the labour market remains strong. In the near term, we may see the above-mentioned “sell the fact” trade where the Nasdaq pulls back towards the 12660 resistance turned support and then either bounces or sells off more.

On the 1 hour chart below, we can see that the buyers may be waiting at the 38.2% Fibonacci retracement level near the 12760 high with a limited risk below the 12660 support. This 12660-12760 will be the buying zone and the target will be the 13174 resistance.

The sellers will want to see the Nasdaq breaking below that buying zone to target the 12400ish level where we find the upward trendline. In case the price falls below the trendline, the sellers will pile in more aggressively as it would open the door for a big selloff towards the 11800 swing low level.