Yesterday, the Nasdaq Composite came under pressure as we got another slate of hot US data. In fact, the US PPI beat expectations across the board followed by strong US Jobless Claims where we also got a big positive revision to Continuing Claims data. Despite a miss in the US Retail Sales, the market started to fear a more hawkish Fed next week with a possible revision to the Dot Plot showing just two rate cuts this year instead of three.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite is consolidating around the highs. The buyers are already starting to pile in around the trendline where we can also find the red 21 moving average for confluence to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into new lows.
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 as the dip-buyers continue to pile in around the key trendline while the sellers keep pushing lower supported by the stronger data and the risk of a hawkish FOMC decision next week. A break above the 16206 level should see the buyers taking back full control and trigger a rally into a new all-time high.
Upcoming Events
Today we conclude the week with the US Industrial Production data and the University of Michigan Consumer Sentiment survey.
