Last week, the Nasdaq Composite pulled back into key levels as the stronger than expected inflation data and the quick rise in Treasury yields weighed on the stock market. There’s been also some profit-taking as we approach the FOMC rate decision on Wednesday with the risk of a hawkish surprise. Overall, the market is likely to remain supported as long as the Fed does not restart to hike rates, or the economy does not falter.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite pulled back into the key trendline where we can also find the red 21 moving average for confluence. This is where we can expect the buyers to step in with a defined risk below the 15859 level to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking below the trendline and the 15859 level to increase the bearish bets into the 15453 level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. We can also notice that the price action formed what looks like a rising wedge, so if the price were to break below the trendline and the 15859 level, the sellers will have much more conviction to look for new lows with the base of the wedge at 14477 being the ultimate target.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent rangebound price action with the price trading right around the recent lows. The buyers will need to defend the 15859 support as a break below it will likely trigger a selloff to new lows and increase the bearish momentum.
Upcoming Events
This week we have the FOMC rate decision on Wednesday where the Fed is expected to keep rates unchanged. The market will be on the lookout for hawkish surprises though following the stronger than expected inflation data. On Thursday, we conclude with the latest US PMIs and Jobless Claims figures.
