Yesterday, the Nasdaq Composite sold off into the close as the Fed came out a bit more hawkish than expected. In fact, not only the statement contained a line that hinted to a pushback against the March cut, but also Fed Chair Powell doubled down saying that a March cut was not their base case. All of the above though is conditional to the data as they just want to see inflation continuing to slow towards their target. If we get some weak reports, especially on the labour market side, then the Fed will have more confidence in delivering a rate cut in March.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite yesterday sold off into the key support zone around the 15150 level where we can find the confluence of the trendline, the 38.2% Fibonacci retracement level and the red 21 moving average. This is where the buyers will likely step in with a defined risk below the trendline to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 14477 level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the bullish setup around the support 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. The divergence with the MACD, which is generally a sign of weakening momentum, suggested that a pullback into the 15150 level was likely and that’s what we’ve got, but a break below the trendline would also signal a reversal, which would make a drop into the 14477 level more 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 opening below the 15400 support yesterday, retesting the level and continuing lower into the trendline. If the buyers succeed and the price further breaks above the 15400 level, then we can expect the bullish momentum to pick up and extend the rally into new highs.
Upcoming Events
Today we get the latest US Jobless Claims figures and the ISM Manufacturing PMI. Tomorrow, we conclude the week with the US NFP report.
