Last week, the FOMC made the decision to temporarily halt its tightening cycle, setting it at 5.00-5.25%. The rationale behind this move was their intention to gather more economic data before proceeding with additional interest rate hikes. Their aim is to carefully adjust the appropriate level of monetary restraint required to bring inflation down to the desired 2% target, while minimizing any adverse impact on the overall economy. Following the FOMC decision, the Nasdaq Composite experienced a surge in value the following day but pulled back slightly just before the extended Juneteenth weekend.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite has extended its rally much above the resistance at 13174. This breakout opened the door for a move all the way up to the 14649 resistance and, if the disinflationary trend continues without too much pain in the labour market, we are likely to see that happening.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the moving averages keep providing a dynamic support for the buyers. For the sellers it’s a really hard environment as there’s no clear resistance level to lean onto. In fact, they can only wait for some break of technical levels to pile in.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the short-term price action. A break below the swing low level at 13660 should see some sellers starting to pile in targeting a bigger pullback into the 13174 support where we can also find the 50% Fibonacci retracement level. That’s where the buyers will look to enter again the market, all else being equal, and target the 14649 resistance.
The economic calendar for this week is relatively bare on the data front, although we will hear from many Federal Reserve officials, including Fed Chair Powell, who will testify before Congress on both Wednesday and Thursday. On Thursday, we will see another US Jobless Claims report, while on Friday we will end the week with the US PMIs.