The Nasdaq Composite opened higher yesterday following the less hawkish than expected Fed decision where the central bank left interest rates unchanged once again and Fed Chair Powell said that they “have not yet made any decision on future meetings” suggesting that they may not hike at all anymore.
On the data front, yesterday the US Jobless Claims missed expectations once again with Continuing Claims now rising at a fast pace. At this point, it’s hard to see the Nasdaq Composite rallying on bad data as the recession becomes more likely, but the market might like it in the short-term because it would decrease Treasury yields and increase rate cut odds. Anyway, the technicals should help in determining the most likely direction with the key levels in place.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite opened higher yesterday as the positive risk sentiment from the FOMC meeting extended to the following day. The price broke above the key 13174 resistance, and it now looks likely that the buyers could reach the trendline around the 13400 level. That’s where we can expect the sellers to step in more aggressively as they will have a much better risk to reward setup to position for a drop into the 12274 support.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the upside gap above the 13174 resistance. We can also notice though, that the price is a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the buyers would have a much better risk to reward setup if they waited for a pullback into the minor upward trendline where they will also find the 38.2% Fibonacci retracement level and the red 21 moving average for confluence. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 12274 support.
Upcoming Events
Today, we conclude the week with the US NFP report and the ISM Services PMI.
