The Nasdaq Composite continues to retreat from the cycle high as the market might have gone too far too fast and now needs a healthy pullback. We could even see some profit taking at these levels ahead of key economic releases the next week culminating in the FOMC rate decision on the 13th of December. The data this week showed further weakening on the labour market side with the Continuing Claims yesterday missing expectations by a big margin. The Fedspeak recently has been mostly neutral with the officials pushing back against rate cuts expectations with the market now seeing five rate cuts in 2024.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite drop further from the cycle high at 14446. The sellers might start to get increasingly confident for a deeper pullback while the buyers might start to take some profits off the table ahead of key economic releases the next week.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD recently. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be a signal that the market went too far too fast, and we should see a deeper pullback before the next move. From a risk management perspective, the buyers will have a much better risk to reward setup around the 13700 support where we can also find the confluence with the 38.2% Fibonacci retracement level of the entire rally.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price recently broke below the lower bound of the rising channel which increased even more the odds for a pullback. The first target for the sellers should be the base of the channel around the 14000 level with a further break lower likely triggering a selloff into the support at 13700. The buyers, on the other hand, should lean on those levels to position for a rally into new highs.
Upcoming Events
Today, the main event will be the release of the US ISM Manufacturing PMI which missed expectations by a big margin the last time. Strong data might support the Nasdaq Composite in the short-term while another weak report could trigger some selling.