Yesterday, the Nasdaq Composite spiked into the recent highs following the lower than expected Treasury refunding estimate as yields fell across the board lifting the stock market. The bullish sentiment is a bit overstretched but there weren’t any notable bearish catalysts that could reverse the price action. For now, the path of least resistance remains upward, and the bulls don’t seem scared at all even in the face of this week’s FOMC rate decision and a plethora of key economic data.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite yesterday spiked into the highs following the lower-than-expected Treasury refunding estimate. From a risk management perspective though, the buyers will have a much better risk to reward setup at the trendline where we can also find the confluence with the previous high, the 38.2% Fibonacci retracement level and the red 21 moving average.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the bullish setup around the previous high at the 15150 level. If the price were to break below the trendline, then we can expect the sellers to extend the drop into the 14477 level next. The divergence with the MACD, which is generally a sign of weakening momentum, suggests that a pullback into the 15150 level is likely.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the market bouncing on the most recent swing high. The price is now right at the highs so it wouldn’t be a good idea to chase the market even though some aggressive momentum buyers might go long on the break of the high.
Upcoming Events
This week is going to be a really busy one with the FOMC rate decision and lots of economic data on the agenda. We begin today with the US Job Openings and the US Consumer Confidence reports. Tomorrow we will see the US Employment Cost Index and the ADP data before the FOMC rate decision later in the day. On Thursday, we get the latest US Jobless Claims figures and the ISM Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP report.
