Nasdaq Technical Analysis – The market remains supported by the easing bias

  • The Nasdaq bounced back strongly following Powell’s dovish tilt. What’s next?
nq nasdaq trend

Fundamental Overview

The Nasdaq rallied strongly on Friday as Fed Chair Powell tilted more dovish by saying that “with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”

That saw traders firming up expectations for a rate cut in September which now stands around 84% probability with a total of 54 bps of easing by year-end. Overall, it’s not the repricing in interest rates expectations that supported stocks but hedges into potentially hawkish Powell being unwound.

Now, the focus turns to the US NFP report next week which is going to be crucial and will influence greatly interest rates expectations.

Strong data might take the probability for a September cut towards a 50/50 chance but will certainly see a more hawkish repricing further down the curve which could weigh on the market in the short-term.

Soft data, on the other hand, will likely see traders increasing the dovish bets with a third cut by year-end being priced in and likely support the stock market.

Nasdaq Technical Analysis – Daily Timeframe

Nasdaq Technical Analysis
Nasdaq Daily

On the daily chart, we can see that the Nasdaq recently fell below the major upward trendline but eventually rallied back above it following Powell’s dovish tilt. There’s not much else we can glean from this timeframe, so we need to zoom in to see some more details.

Nasdaq Technical Analysis – 4 hour Timeframe

Nasdaq Technical Analysis
Nasdaq 4 hour

On the 4 hour chart, we can see that we might be forming a range between the 23,375 support and the 23,650 resistance. The price broke above the downward trendline yesterday which should give the buyers more control.

If we get another pullback into the support, the buyers will likely step in there with a defined risk below it to position for a rally into a new all-time high. The sellers, on the other hand, will likely pile in around these levels to target a pullback into the support and eventually a breakout.

Nasdaq Technical Analysis – 1 hour Timeframe

Nasdaq Technical Analysis
Nasdaq 1 hour

On the 1 hour chart, we can see that we have now a minor upward trendline defining the bullish momentum on this timeframe. The buyers will likely lean on it to keep pushing into new highs, while the sellers will look for a break lower to extend the pullback into the support. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have Nvidia earnings after market close. Tomorrow, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE price index.

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