The Nasdaq Composite yesterday didn’t do much as the lack of economic events and the uncertainty around the breakout led to a consolidation just above the key trendline. Looking ahead there’s not much left for the bulls as the economic data started to weaken lately, especially on the labour market side.
The Fed is determined to keep rates higher for longer and they will likely do so until the unemployment rate reaches the 4.5-5.0% range as the uncertainty around inflation remains high. We have some key economic reports this week and the market might either confirm or deny the latest breakout.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite consolidated right above the key trendline as the market awaits the key economic releases this week. The question at the moment is whether the breakout will be sustained, or the price falls back below the trendline leaving behind a fakeout and raising the odds of a bigger selloff.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the recent breakout and the consolidation right above the resistance and the trendline. The buyers are likely to keep piling in here with a defined risk below the trendline. The sellers, on the other hand, will want to see the price falling back below the resistance to gain more conviction and start targeting 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. The buyers are likely to lean on the resistance turned support, the trendline and the red 21 moving average to defend the breakout and target new highs. If the price falls below the resistance though, the reversal would be confirmed, and the bullish setup would be invalidated.
Upcoming Events
This week we have some top tier economic releases. We begin today with the US CPI report which might be one of the most important events of the week. Tomorrow, we have the US Retail Sales and PPI data, while on Thursday we conclude with the latest US Jobless Claims figures.
