The Nasdaq Composite ended last week on a positive note as we got a strong rally despite some concerning data. The University of Michigan consumer sentiment report missed forecasts across the board by a big margin once again. The bearish signs keep on accumulating with the recent hawkish tone from Fed speakers and the softening labour market data with the big misses in the recent NFP report and the rising Continuing Claims. The buyers should be very careful going forward.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite last Friday broke above the key trendline and the resistance around the 13700 level. The buyers are likely to pile in, but they should be extra careful given that the rally was not supported by any bullish catalysts, so the risk of a fakeout is higher.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the breakout above the key trendline. The sellers will want to see the price falling back below the trendline and the 13700 level to confirm a fakeout and position for a drop into the lows.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. If we get a pullback, the buyers should lean on the upward trendline and the red 21 moving average to position for further upside. If the price breaks below the upward trendline though, the reversal would be confirmed, and the sellers will regain back control.
Upcoming Events
This week we have some top tier economic releases. We begin tomorrow with the US CPI report which is going to be one of the most important events of the week. On Wednesday, we have the US Retail Sales and PPI data, while on Thursday we conclude with the latest US Jobless Claims figures.