Last week, we got some risk aversion in the market as the tensions in the Middle East intensified. In fact, going into the weekend the bearish momentum increased as ABC news reported that the Israeli military got the "green light" to move into Gaza whenever it was ready. Since we haven't seen any ground offence over the weekend, we might see a relief rally today.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite “confirmed” the downside breakout as the price fell not only below the key trendline, but also below the key support around the 13174 level. The sellers have now a high chance of reaching the 12274 support where we will find the buyers stepping in more strongly to position for a rally back to the 13174 level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the Nasdaq Composite now sits at the previous lows and that’s where we can expect the buyers to pile in with a defined risk below the low to position for a relief rally today into the broken support turned resistance and hoping for an upside breakout.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that from a risk management perspective, the sellers would be better off waiting for the price to pull back into the trendline where we can find the confluence with the 38.2% Fibonacci retracement level, the red 21 moving average and the previous support turned resistance. The buyers, on the other hand, will want to see the price further breaking higher to invalidate the bearish setup and increase the bullish bets into the next resistance around the 13400 level.
Upcoming Events
Tomorrow, 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.
