The Nasdaq Composite selloff has been remarkable with key levels being breached with no hesitation as the sentiment turned negative. The reason for the selloff is unclear as the US data has been supporting the soft-landing narrative but the sharp slowdown in the Chinese economy is expected to infect the other advanced economies and drag the global economy down. Moreover, the quick rise in long term Treasury yields is also tightening financial conditions with real yields approaching the levels last seen during the Global Financial Crisis of 2008. It’s a tough environment for sure, so the technicals will be very helpful in managing the risk.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite broke below the trendline and extended the selloff into the key 13174 support. This is where we can expect the buyers stepping in more strongly with a defined risk below the level to target another rally to the high. The sellers, on the other hand, will want to see the price breaking below the support to extend the selloff into the 12274 level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is indeed bouncing from the support at the moment and if see a bigger pullback, the sellers are likely to step in near the broken trendline now turned resistance, the 38.2% Fibonacci retracement level and the red 21 moving average.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a strong minor trendline where the sellers have been leaning on to position for more downside. We can expect them to do so again and we can see that we have also the confluence with the Fibonacci retracement levels and the previously mentioned moving average. The buyers will need the price to break above the trendline to turn the bias more bullish and get the conviction to target the high again.
Upcoming Events
This week is pretty empty on the data front with just the US PMIs scheduled for Wednesday and the US Jobless Claims for Thursday. We seem to be at a point where good news is bad news because of the Fed’s stance and bad news is bad news because the slowdown in global growth will lead to a recession in many countries included the US. Remember also that it’s the Jackson Hole Symposium week, so we will get comments from Fed officials again and especially Fed Chair Powell who is scheduled to speak on Friday.