Following the miss across
the board in the US CPI report, the market is increasingly confident
that we are heading towards a soft landing. Such expectations are also supported
by the strong labour market, as was confirmed again by the US Jobless Claims last Thursday, and the rising
consumer sentiment, as seen in the University of Michigan report last Friday. Moreover, the US Retail Sales recently missed on the headline
numbers, but the Control Group, which is seen as a better gauge of consumer
spending, was higher than expected. As long as the economic data doesn’t
deteriorate too much, we will likely see new highs in the Nasdaq Composite.
Nasdaq Composite Technical
Analysis – Daily Timeframe
Nasdaq Composite Daily
On the daily chart, we can see that the buyers kept
leaning on the red 21 moving average to
position for new highs and they are now eyeing the 14649 resistance. That’s
where we should find strong sellers stepping in with a defined risk above the
level to target a bigger pullback into the trendline.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
Nasdaq Composite 4 hour
On the 4 hour chart, we can see that since breaking
out of the ascending triangle pattern
following the miss in the US CPI report, the Nasdaq Composite extended the
rally to new highs. If we get a pullback, the buyers are likely to lean on the
red 21 moving average to position for another extension to the upside.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
Nasdaq Composite 1 hour
On the 1 hour chart, we can see that we
have a minor divergence with
the MACD as the
price is approaching the 14649 resistance. This is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case, we
should see the buyers leaning on the minor trendline and the red 21 moving
average to target the resistance. On the other hand, if the price falls below
this trendline, the sellers should pile in and target the 14077 level as the
target for the divergent setup.
Upcoming
Events
Today the main event will be the US Jobless Claims
report as the market is attentive to the state of the labour market. Given the
current context, a small miss to the expectations shouldn’t cause too much fear
in the market as it would be seen as just a healthy softening and provide an
opportunity to buy the dip. On the other hand, a beat to the expectations
should give the Nasdaq Composite another boost to rally to new highs. As things
stand, only a big miss to the forecasts may weigh on the Nasdaq as the market
might fear a recession on the horizon.