Yesterday, the Nasdaq Composite held into last Friday’s gains as the market continues to see a soft landing ahead where inflation falls to target with stable growth and without a significant rise in unemployment. For now, the data supports such thesis but there are still monetary policy lags that need to filter through the economy in the next months and the Fed might not be able to engineer a soft landing as they would need to time perfectly the rate cuts which is unlikely to see. All eyes now will be on the US CPI report today and the FOMC rate decision tomorrow.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite recently bounced on the red 21 moving average and extended the rally back into the cycle high following the strong economic data last Friday which supported the soft-landing narrative. The sellers are likely to step in here with a defined risk above the cycle high to position for a drop into the 13700 support where we can also find the 38.2% Fibonacci retracement level for confluence.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD into the cycle high. This is generally a sign of weakening momentum often followed by pullbacks or reversals. This might be a signal that we could get a selloff right from the cycle high, so the buyers might want to be extra careful going forward. Nevertheless, a break above the cycle high could lead to more buying momentum and new higher highs, so the buyers might want to keep playing the upside.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the tentative price action into the cycle high. What happens here might decide where the Nasdaq Composite will go in the next few weeks as a break to the upside should lead to more highs, while a strong rejection to the downside is likely to trigger a selloff into the 14050 level first and upon a further break lower, the 13700 support.
Upcoming Events
This week is going to be a big one with the US CPI and the FOMC rate decision on the agenda. We begin today with the release of the US CPI report where the market will want to see how the disinflationary trend is going. Tomorrow, we have the US PPI data followed by the FOMC rate decision where the Fed is expected to keep interest rates unchanged. On Thursday, we will see the US Retail Sales and Jobless Claims figures, while on Friday we conclude the week with the US PMIs.
