Fundamental Overview
The Nasdaq this week rallied strongly following the beat in the US ISM Services PMI where the data showed that the last month drop was just a blip and overall we have a resilient economy with lower inflationary pressures. The data continues to reinforce the narrative that the next move is more likely to be a rate cut, and that inflation is likely to keep coming back to target. This should keep the market supported amid a positive risk sentiment.
The main risk today could come from the US NFP report where bad data across the board could weigh on sentiment and push the market lower. Overall, the buyers won’t want to see hot wage growth and a big jump in the unemployment rate as both the outcomes should be bearish for the market.
Nasdaq Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq rallied to a new all-time high recently following the strong US data. From a risk management perspective, the buyers will have a much better risk to reward setup around the 18255 level where we can find the confluence of the recent swing low and the trendline. As things stand though, it’s unlikely to see such a big drop without ugly labour market numbers or a surprising hot inflation report.
Nasdaq Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently surged to a new all-time high and consolidated right around the previous all-time high level. This is where the buyers are stepping in with a defined risk below the level to position for a continuation of the trend. The sellers, on the other hand, will want to see the price breaking lower to gain some control and target the 18255 level.
Nasdaq Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a resistance now at 19108 and a trendline acting as support around the 19000 level. The red lines define the average daily range for today, although the price can extend beyond these levels when there are strong catalysts like today’s NFP report.
The buyers will want to see the price breaking higher to increase the bearish bets into new highs. Alternatively, they can lean on the trendline with a defined risk below it. The sellers, on the other hand, will want to see the price breaking lower to pile in and target the 18700 level.
Upcoming Catalysts
Today we conclude the week with the US NFP report where the consensus sees 185K jobs added in May and the unemployment rate remining unchanged at 3.9%. Moreover, the average hourly earnings are seen at 3.9% for the Y/Y figure and 0.3% for the M/M measure.
