Yesterday, the Nasdaq Composite dropped following the big beat in the US PMIs as the rise in Treasury yields weighed on the market. The data was still in support of the soft-landing narrative with the commentary in the PMI report citing fastest output growth in seven months and sharp cooling in inflation. Given the resilience of the labour market and consumer spending, the rate cuts continue to be pushed back a little, but as long as the disinflationary trend remains intact, we can expect the Fed to proceed with the “insurance” cuts anyway.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite yesterday fell into the close following the rise in Treasury yields. The price was overstretched anyway 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. The buyers will have a much better risk to reward setup around the moving average where they will also find the confluence with the previous high and the 38.2% Fibonacci retracement level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the bullish setup around the previous high at the 15150 level. If the price were to break below the level, then we can expect the sellers to extend the drop into the trendline where the buyers will have another opportunity to go long. The divergence with the MACD, which is generally a sign of weakening momentum, suggests that a pullback into the 15150 level is very likely.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the Nasdaq Composite now around the most recent swing high and the red 21 moving average. This is where we can expect aggressive buyers to step in with a defined risk below the support zone to position for a rally. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 15150 level.
Upcoming Events
Today we will see the Advance US Q4 GDP and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US PCE report.
