Yesterday, we got a bounce in the Nasdaq Composite as the risk sentiment improved on the geopolitical front due to the lack of an Israeli ground offensive into Gaza and the release of some hostages. On the macro front, Treasury yields fell as some big names in the investing world said that they covered their bearish bond positions due to a deterioration in the economic environment. The Nasdaq Composite benefited in the short term, but if the economy is indeed slowing down faster than the data shows, it’s going to be hard for the bulls to sustain any upside.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite yesterday bounced on the bottom trendline as the risk sentiment improved. We can also notice that the price is diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. This is where the buyers should start piling in to position for a rally into the top trendline, while the sellers will want to see the price breaking lower to invalidate the bullish setup.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the yesterday’s bounce on the bottom trendline, although the Nasdaq Composite eventually fell into the close. The bias is still skewed to the downside given the downside breakout of the major upward trendline and the 13174 support, but the buyers are starting to have some key levels in their favour.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the Nasdaq Composite got rejected from the minor trendline where the sellers had the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. We can see that we might form an inverted head and shoulder pattern around the previous low and that’s where the buyers should step in with a defined risk below the level to position for a break above the minor trendline and target the top trendline. The sellers, on the other hand, will want to see the price breaking lower to invalidate the pattern and increase the bearish bets into the 12274 support.
Upcoming Events
Today, we will get the US PMIs and the market might not like bad figures given the fragile risk sentiment. On Thursday, we will see the US Jobless Claims data with Continuing Claims recently showing some softness in the labour market. Finally, on Friday, we will get the US PCE report, which is not expected to change anything for the Fed at this time.
