After a big rally following
the miss in the US CPI report, the market’s momentum showed signs of waning as
it approached a crucial resistance level and started to pull back. Despite
this, the data remains supportive of the soft-landing narrative, with last
week’s US Retail Sales and Jobless Claims beating expectations.
As we approach the FOMC
rate decision, some investors might be engaging in profit-taking or adopting
defensive positions, potentially contributing to the current market pullback.
Nevertheless, if the data keeps on showing a resilient economy, we should see
the dips in the Nasdaq Composite being bought.
Nasdaq Composite Technical
Analysis – Daily Timeframe
Nasdaq Composite Daily
On the daily chart, we can see that the price has
started to pullback from the 14448 level as the market couldn’t sustain the
bullish momentum into the FOMC meeting this week. We have a strong support level at
the previous 13862 resistance. In fact, we can see that we will have the confluence with the
red 21 moving average which
provided great support the last time.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
Nasdaq Composite 4 hour
On the 4 hour chart, we can see that we will also
have the confluence with the 50% Fibonacci retracement level
and the trendline that
defined the ascending triangle pattern.
That’s where we should expect the buyers to step in with a defined risk below
the trendline and target the 14649 resistance. The sellers, on the other hand,
will want to see the price breaking lower to pile in and extend the fall into
the 13174 support.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
Nasdaq Composite 1 hour
On the 1 hour chart, we can see more
closely the key support to watch. This is where the fight between buyers and
sellers will decide where the price will go next. A bounce should lead to 14649
resistance, while a break lower should lead to 13174.
Upcoming
Events
Throughout this week, a
series of market-moving events will hit the market. Commencing
today, all eyes will be on the US PMIs, and depending on whether the data
surpasses or falls short of expectations, we could see a market rally or a
decline. On Wednesday, the Fed is expected to hike by 25 bps, bringing the FFR
to 5.25-5.50%. This decision shouldn’t have a big impact on the market given
that it’s widely expected.
On Thursday, we will see the
latest US Jobless Claims, wherein positive data is expected to lead to a rally,
while a negative outcome might lead to a selloff. Concluding the week, the
attention will turn to the US PCE and ECI reports, with the market seeking
softer numbers to validate the soft-landing narrative.