After a big rally following the miss in the US CPI report, the market's momentum showed signs of waning as it approached a crucial resistance level and started to pull back. Despite this, the data remains supportive of the soft-landing narrative, with last week's US Retail Sales and Jobless Claims beating expectations.
As we approach the FOMC rate decision, some investors might be engaging in profit-taking or adopting defensive positions, potentially contributing to the current market pullback. Nevertheless, if the data keeps on showing a resilient economy, we should see the dips in the Nasdaq Composite being bought.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the price has started to pullback from the 14448 level as the market couldn’t sustain the bullish momentum into the FOMC meeting this week. We have a strong support level at the previous 13862 resistance. In fact, we can see that we will have the confluence with the red 21 moving average which provided great support the last time.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we will also have the confluence with the 50% Fibonacci retracement level and the trendline that defined the ascending triangle pattern. That’s where we should expect the buyers to step in with a defined risk below the trendline and target the 14649 resistance. The sellers, on the other hand, will want to see the price breaking lower to pile in and extend the fall into the 13174 support.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the key support to watch. This is where the fight between buyers and sellers will decide where the price will go next. A bounce should lead to 14649 resistance, while a break lower should lead to 13174.
Upcoming Events
Throughout this week, a series of market-moving events will hit the market. Commencing today, all eyes will be on the US PMIs, and depending on whether the data surpasses or falls short of expectations, we could see a market rally or a decline. On Wednesday, the Fed is expected to hike by 25 bps, bringing the FFR to 5.25-5.50%. This decision shouldn’t have a big impact on the market given that it’s widely expected.
On Thursday, we will see the latest US Jobless Claims, wherein positive data is expected to lead to a rally, while a negative outcome might lead to a selloff. Concluding the week, the attention will turn to the US PCE and ECI reports, with the market seeking softer numbers to validate the soft-landing narrative.
