Following the miss across the board in the US CPI report, the market is increasingly confident that we are heading towards a soft landing. Such expectations are also supported by the strong labour market, as was confirmed again by the US Jobless Claims last Thursday, and the rising consumer sentiment, as seen in the University of Michigan report last Friday. Moreover, the US Retail Sales recently missed on the headline numbers, but the Control Group, which is seen as a better gauge of consumer spending, was higher than expected. As long as the economic data doesn’t deteriorate too much, we will likely see new highs in the Nasdaq Composite.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the buyers kept leaning on the red 21 moving average to position for new highs and they are now eyeing the 14649 resistance. That’s where we should find strong sellers stepping in with a defined risk above the level to target a bigger pullback into the trendline.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that since breaking out of the ascending triangle pattern following the miss in the US CPI report, the Nasdaq Composite extended the rally to new highs. If we get a pullback, the buyers are likely to lean on the red 21 moving average to position for another extension to the upside.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor divergence with the MACD as the price is approaching the 14649 resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we should see the buyers leaning on the minor trendline and the red 21 moving average to target the resistance. On the other hand, if the price falls below this trendline, the sellers should pile in and target the 14077 level as the target for the divergent setup.
Upcoming Events
Today the main event will be the US Jobless Claims report as the market is attentive to the state of the labour market. Given the current context, a small miss to the expectations shouldn’t cause too much fear in the market as it would be seen as just a healthy softening and provide an opportunity to buy the dip. On the other hand, a beat to the expectations should give the Nasdaq Composite another boost to rally to new highs. As things stand, only a big miss to the forecasts may weigh on the Nasdaq as the market might fear a recession on the horizon.
