After four consecutive green days, the Nasdaq Composite yesterday got under some pressure caused by an ugly bond auction that made Treasury yields to spike higher. The US data before the auction hasn’t weighed on the index as Core CPI came in line with expectations and Jobless Claims beat forecasts again. In fact, the market’s pricing for future interest rates expectations hasn’t changed much, so we might see yesterday’s dip being bought back today.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite finally pulled back a bit after the strong rally from the 13174 support. The culprit seems to have been the ugly bond auction as we got a spike in Treasury yields but the buyers stepped in into the close around a key support. The target for the buyers remains the trendline around the 13800 level with a breakout likely leading to a new cycle high.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price pulled back into the broken minor trendline in what could end up being a “break and retest” pattern. This is where we can expect the buyers to pile in with a defined risk below the trendline and position for a rally into the major trendline. The sellers, on the other hand, will want to see the price falling back below the trendline to leave behind a fakeout and target again a break below the 13174 support.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the bullish setup with the support zone around the 13500 level where we have the confluence with the broken trendline, the swing support and the 38.2% Fibonacci retracement level of the entire rally. A break below the support should invalidate the setup and lead to more selling.
Upcoming Events
Today the only notable event on the agenda is the University of Michigan Consumer Sentiment report although it has lost its market moving ability lately. Only big surprises are likely to have an impact on the market.
