Yesterday, the Nasdaq Composite opened higher but ended the day negative as the profit-taking and the rise in Treasury yields kept on weighing on the stock market. All eyes continue to be on the FOMC rate decision tomorrow as there is a risk that the central bank sounds more hawkish than expected in light of the easing in financial conditions and the recent beats in the inflation data. There is also a lack of economic data until after the Fed decision, so we will likely continue to see a rangebound price action in the meantime.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite bounced from the key trendline where we had also the red 21 moving average for confluence. That’s where the buyers stepped in with a defined risk below the trendline and positioned for a rally into a new all-time high. Unfortunately, the price continues to be rejected by the strong 16206 resistance where the sellers keep piling in to position for a break below the trendline with a better risk to reward setup.
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 having a hard time breaking the key resistance. The buyers will likely keep on stepping in around the trendline and the 15859 level to position for a break above the resistance, while the sellers will look for a break below those levels to increase the bearish bets into new lows.
Upcoming Events
Tomorrow we have the FOMC rate decision where the Fed is expected to keep rates unchanged. On Thursday, we conclude with the latest US PMIs and Jobless Claims figures.
