Yesterday, the Nasdaq Composite surged and ended the day positive following the US CPI release. Although the data beat expectations slightly, the market’s pricing for rate cuts didn’t change much as the overall weaker data in February is giving the market hope that the reacceleration in the prior months was transitory and that inflation will not flare up again. Looking ahead we don’t have much key data left before the FOMC meeting next week, but there are some expectations that the Fed might sound less dovish following the two consecutive beats in the CPI data and that could trigger some profit taking and defensive positioning into the event.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite yesterday bounced on the red 21 moving average and rallied back to the highs. From a risk management perspective though, 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 rally into the all-time high diverged with the MACD. The target is generally the base of the divergent formation, so 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
Tomorrow 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.
