Yesterday, the Nasdaq Composite retreated a bit after the strong rally following the miss in the ISM Manufacturing PMI last Friday. There might be some profit taking going on as we finally made a new all-time high and we have lots of risk events ahead with the US labour market data and Fed Chair Powell testifying to Congress. The path of least resistance remains to the upside until we either see growth deteriorating or the economic data makes the market to expect the Fed to make a U-turn on rate cuts.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite extended the rally into a new all-time high last Friday. The price started to retreat yesterday as the sellers stepped in with a defined risk above the high to position for a drop into the key trendline targeting a break below it. The buyers, on the other hand, will want to wait for the price to reach the trendline to position for a rally into new highs with a better risk to reward setup.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. The pullbacks in this case resolved all into the trendline, so we can expect the price to do the same in the next few days. We can also notice that we might have formed a rising wedge, so it will be important for the buyers to avoid a break below the bottom trendline because it could trigger a selloff into the base of the wedge at 14477.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have now a resistance turned support around the 16130 level where we have also the 50% Fibonacci retracement level and the red 21 moving average for confluence. The buyers might want to split their position in half between the support and the trendline as the price can bounce on either level before continuing higher. The sellers, on the other hand, will want to see the price breaking below the bottom trendline to invalidate the bullish setup and increase the bearish bets into new lows.
Upcoming Events
This week we have lots of important events on the agenda with the release of the US labour market data and the Fed Chair Powell testifying to Congress. We begin today with the US ISM Services PMI. Tomorrow, we have the US ADP, the US Job Openings and the Fed Chair Powell speaking. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US NFP report.
