The Nasdaq Composite seems to be bottoming out as the US data continues to support the soft landing narrative with Jobless Claims last week beating once again expectations and the ISM Manufacturing PMI yesterday showing signs of rebounding. The fears of a hawkish Fed might be put aside if the economy remains resilient and the labour market doesn’t deteriorate too much.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite rallied back above the key resistance around the 13174 level. The last week’s breakout is starting to look like a fakeout, which is a reversal pattern, and we might see a rally into the black trendline around the 13800 level. A break back below the 13174 level would be ominous for the buyers and we should see the sellers pile in aggressively to position for a drop into the 12274 support.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is struggling at a strong resistance defined by the 38.2% Fibonacci retracement level and the red 21 moving average. This is where the sellers are stepping in with a defined risk above the Fibonacci level to target another break below the 13174 support. The buyers, on the other hand, will want to see the price breaking higher to pile in and target the black trendline.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we had a divergence with the MACD right after the breakout. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we might be in front of a reversal as the price action has also formed what looks like an inverted head and shoulders pattern. The neckline is right around the 38.2% Fibonacci retracement level so a break above it should trigger a rally into the highs. The sellers will need the price to sell off from here to invalidate the bullish setup and position for new lows.
Upcoming Events
Today, we will have the US Job Openings data which led to a strong rally the last time as the big miss made Treasury yields to fall due to less labour market tightness and less hawkish Fed expectations. Tomorrow, it will be the time for the ADP report and the ISM Services PMI. On Thursday, we will see the Jobless Claims data, which continues to show a solid labour market. Finally on Friday, it will be the time for the NFP report which is the only one the Fed will see before its next rate decision.
