Last week the US data surprised to the upside with
the ISM Services PMI and Jobless Claims beating
expectations by a big margin. The market didn’t like the strong data as it
raises the chances of another rate hike in November. In fact, the Nasdaq
Composite sold off following the PMI beat with some consolidation thereafter,
even after the strong Jobless Claims. The market seems to be trading on “good
news is bad news” at the moment, but the outlook remains uncertain.
Nasdaq Composite Technical
Analysis – Daily Timeframe
Nasdaq Composite Daily
On the daily chart, we can see that the Nasdaq
Composite retested the broken trendline and sold
off following the strong US data release into the red 21 moving average where it
bounced as the buyers stepped in. The moving averages are still crossed to the
upside, so the bias remains bullish, but the buyers will need some key
breakouts to keep on rallying.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
Nasdaq Composite 4 hour
On the 4 hour chart, we can see that the price is
trading around the minor upward trendline which is defining the bearish flag pattern.
A break below the trendline should confirm the pattern and lead to a fall into
the 13174 support. The
buyers are likely to step in here targeting a break above the 13850 resistance
to invalidate the bearish setup.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
Nasdaq Composite 1 hour
On the 1 hour chart, we can see more
closely the key 13850 resistance zone that is likely to decide where we will go
next. In fact, a break above the resistance zone and the downward trendline
should invalidate the bearish setup and give the buyers more conviction to
target a new higher high. The sellers, on the other hand, are likely to pile in
here around the resistance with a defined risk above it and target a selloff
into the 13174 support.
Upcoming
Events
This week is likely to be a volatile one given the
release of top tier economic indicators including the US CPI. In fact, on
Wednesday we get the US CPI report, which is expected to show an acceleration
in the headline inflation but a deceleration in the core measure. On Thursday,
we get the US PPI, Retail Sales and Jobless Claims data. Finally, we conclude
the week with the University of Michigan Consumer Sentiment report on Friday.