Yesterday, the Nasdaq Composite closed the day at the highs as the positive risk sentiment continues to dominate the price action. The market views the recent developments as goldilocks with strong consumer spending and sentiment, resilient labour market and inflation almost back to target. The only risk now is that the Fed becomes more worried about the strength and delays the rate cuts until there’s some clear weakness in economic activity or the data deteriorates abruptly. As long as the current narrative holds though, the market is likely to keep on buying the dips.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite managed to close at the highs yesterday. The price is now a bit overstretched as we can see 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 – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where we can also find the 61.8% Fibonacci retracement level for confluence. Alternatively, there’s also the previous high around the 15150 level that could act as support with the daily 8 moving average for confluence.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the two bullish setups around the 15150 high and the trendline. The buyers might want to split their positions as the price can bounce from either level. The sellers, on the other hand, will want to see the price breaking below the trendline to invalidate the bullish setup and start targeting new lows.
Upcoming Events
Today the main event will be the US PMIs as the market will want to see how business activity has fared in January after some worrying data from regional surveys. Tomorrow, we have the Advance US Q4 GDP and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report.
