Yesterday, the Fed left interest rates unchanged at 5.25-5.50% as expected but revised its outlook on the more hawkish side. In fact, the Fed not only sees another rate hike by the end of the year but also much less rate cuts in 2024 as they revised it from 4.6% seen in June to 5.1% now. The macroeconomic projections were also revised higher indicating a resilient economy. In the press conference Fed Chair Powell reaffirmed their data dependency and the need to move carefully as they approach the terminal rate. One thing that caught everyone by surprise is when asked if he would call the soft landing a baseline expectation now, Powell said "No, I would not do that".
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite eventually broke out of the consolidation following the FOMC meeting and it’s now eyeing the key support at 13174 where we have also the confluence with the trendline and the 38.2% Fibonacci retracement level. This is where the buyers should step in with a defined risk below the level to position for a rally into the highs. The sellers, on the other hand, will want to see the price breaking through the level to pile in even more aggressively and target the 12274 level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the Nasdaq Composite basically broke out of the bearish flag. The target for this pattern is generally the equal extension of the first bearish leg, so we might even see a break below the key support and a selloff into the 12274 level. For now, the bias remains bearish as the price is printing lower lows and lower highs with the moving averages being crossed to the downside.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the optimal level to short was after the breakout of the support. The price has already moved a lot and it’s never a good idea to chase the market. If the price pulls back, the sellers should lean on the downward trendline and the previous low to position for another selloff into the 13174 support. The buyers, on the other hand, will want to see the price to break above the trendline to invalidate the bearish setup and start targeting new higher highs.
Upcoming Events
The week is drawing to a close, but we still have a couple of key economic releases ahead. Today, the main event will be the US Jobless Claims report as the labour market data remains very important for the Fed and the market. Tomorrow, we will see the latest US PMIs data which is expected to be market moving.
