The Nasdaq Composite managed to hold into the last week gains and consolidated near a key resistance as the first part of the week didn’t offer any meaningful catalysts. The things should change today though as we will see the latest US Jobless Claims data and given the recent weakness in the labour market data, the market is likely to react strongly to this report.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite reached a key resistance zone where we can find the confluence with the trendline, the broken upward trendline and the previous swing high. The price is also overstretched to the upside as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move. Overall, the bias should be skewed to the downside.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the key resistance highlighted by the blue box. This is where the sellers should be stepping in with a defined risk above the trendline to position for a selloff into new lows with a great risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and start targeting a new high.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been diverging with the MACD right into the key resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. This is another layer of confluence for the bearish setup and we are likely to see a pullback into the 13400 level at very least where we have the most recent swing low and the broken trendline. A break below the 13400 level should increase the bearish momentum as the sellers will gain even more conviction to target new lows.
Upcoming Events
Today we have the US Jobless Claims on the agenda, while tomorrow it will be the time for the University of Michigan Consumer Sentiment report. The market is likely to focus on the US Jobless Claims given the recent weakness in the labour market data. Weak figures are likely to weigh on sentiment and push the Nasdaq Composite lower, while good readings might be enough for the market to rally.
