Yesterday, the Nasdaq Composite ended another day negative as the market was caught between the uncertainty around the labour market following the NFP report and the risk of the US CPI data. The US CPI today beat expectations slightly, but the markets faded the reaction quickly and ended basically at the pre-release levels. The technicals in this case will be helpful in gauging the most likely direction as we approach key levels.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite failed to extend the rally after making a new all-time high as the price got smacked back down following the NFP report. From a risk management perspective, the buyers will have a much better risk to reward setup around the 15876 level where we can find the confluence of the trendline and the red 21 moving average. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and increase the bearish bets into new lows.
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. We can also notice that the price action formed what looks like a rising wedge, so if the price were to break below the trendline, the sellers will have much more conviction to look for new lows with the base of the wedge at 14477 being the ultimate target.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest leg higher diverged with the MACD and we got a break below the minor upward trendline. This should confirm a pullback into the major trendline where we can also find the 61.8% Fibonacci retracement level for confluence. What happens there will be key as a break below the trendline could lead to a major correction.
Upcoming Events
On Thursday we get the US PPI, the US Retail Sales and the US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
