Last week was the Jackson Hole Symposium week and we have heard from many Fed members about their opinions on the momentary policy going forward. There seems to be a consensus for a pause in September as they try to “carefully” assess the lag effects of their tightening to date. Nonetheless, they are ready to do more if conditions require further tightening and in fact, they keep reaffirming their data dependency. The economic data since the last FOMC meeting has been surprising to the upside with the labour market remaining very strong, but the last two inflation reports showed the Core M/M inflation rising by just 0.16%. Overall, it looks like a soft landing scenario but the latest US PMIs showed that there might be pain ahead.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite bounced on a key support at 13174 and rallied back towards the broken trendline where we had also the confluence with the red 21 moving average. The price got rejected there as the sellers leant on the moving average to position for another fall below the key support. The bias for now remains bearish as the price has been printing lower lows and lower highs and the moving averages are crossed to the downside.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the resistance zone that we had around the broken trendline with the 50% Fibonacci retracement level acting as a further barrier. This resistance will be key for the buyers as they will need the price to break above the level to switch the bias from bearish to bullish and start targeting a new high.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance around the 13615 level where we have the confluence of the 50% Fibonacci retracement level and the red 21 moving average. This is where we can expect the sellers to pile in with a defined risk above the level to target the break below the 13174 support. The buyers, on the other hand, will want to see the price breaking higher to pile in and target a break above the 13850 resistance.
Upcoming Events
This week is an important one given that we will see many key labour market data, including the US NFP, before the next FOMC meeting. We start tomorrow with the US Consumer Confidence and the US Job Openings. On Wednesday, we have the US ADP report. Moving on to Thursday, we will have the US Jobless Claims and the US PCE data. Finally, we conclude the week with the US NFP and the ISM Manufacturing PMI on Friday. Although the Fed keeps all the options on the table, it’s also leaning more towards a pause in September, so we will need strong data to make the market to expect a hike at the upcoming meeting.