Last week, the Fed hiked the interest rates by 25 bps as widely expected keeping everything unchanged. Fed Chair Powell reiterated their data dependency and kept all the options on the table. The economic data since the FOMC meeting has been pretty solid and the labour market indicators keep on running hot. This week we got a selloff that began with the rating agency Fitch downgrading US credit rating to AA+ from AAA and then extended further as the US ADP report came in hot again.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite is experiencing a deeper correction as it struggles to extend to the 14649 high. The price currently sits at the previous resistance turned support, but the sellers may be targeting the upward trendline where the buyers should step in more aggressively.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had a divergence with the MACD on the last leg higher which is generally a sign of weakening momentum often followed by pullbacks or reversals. The buyers should pile in here around the 13885 support where we have also the confluence with the 50% Fibonacci retracement. The sellers, on the other hand, should pile in more aggressively if the price breaks lower and target the trendline first, and eventually the 13174 support.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current bullish setup with the price that may even print a little inverted head and shoulders pattern right at the support. What happens here will probably lead to a big move afterwards, so buyers and sellers will watch this level carefully after the NFP report today.
Upcoming Events
Today, all eyes will be on the US NFP report. The Fed will see another NFP report before the next meeting so this one won’t decide what they are going to do but it can change market expectations, nonetheless. It’s hard to see what the market is going to do with this data, but a strong report should weigh on the Nasdaq Composite as the market would expect the Fed to remain hawkish and weak readings are likely to cause a selloff as the market may start to fear a recession on the horizon. The technicals here should be more helpful to manage risk and position in line with the flow.
