Yesterday, the Nasdaq Composite had a negative day as the US ADP data missed expectations which might have weighed on the sentiment heading into the NFP report tomorrow. There might also be a general profit taking ahead of the NFP data and the FOMC rate decision next week as the market might want some new strong catalyst to make new highs. In the bigger picture, the market generally peaks when the labour market weakens, and the unemployment rate starts to rise steadily, so the bulls should be very careful heading into the 2024.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite bounced recently on the red 21 moving average but failed to trigger another rally into the cycle high. In fact, yesterday we got a selloff as the miss in the US ADP data might have weighed on the sentiment heading into the NFP report tomorrow. A break below the moving average would be a bad omen for the buyers, although the will still have the support at 13700 as the last line of defence.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price was diverging with the MACD into the cycle high. This is generally a sign of weakening momentum often followed by pullbacks or reversals. We indeed got a pullback recently with the buyers stepping in around the daily 21 moving average. From a risk management perspective though, the buyers would have a much better risk to reward setup at the 13700 support where we can also find the 38.2% Fibonacci retracement level of the entire rally.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the Nasdaq Composite has been diverging with the MACD since the break above the key 13700 resistance zone. We can also see that the 14050 level acted as a good support recently so the buyers might try another rally from there as well, but if the level gets breached, the sellers will pile in aggressively and target a selloff into the 13700 support.
Upcoming Events
Today we get the latest US Jobless Claims figures where the market will want to see how fast the US labour market is weakening. Tomorrow, we conclude the week with the US NFP report which is going to be a big market moving event.
