The fears around a larger conflict in the Middle East eased on Monday as Israel didn’t proceed with a ground offensive in Gaza over the weekend and there are ongoing talks for a more diplomatic resolution. The risk is still there, but the market is looking through it as long as the conflict remains confined to Israel and Hamas. On a more domestic front, the Fed officials continue to repeat that they are probably done with rate hikes and can wait more to see how the economy evolves.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite fell back to the upward trendline and the red 21 moving average where it bounced as the buyers stepped in to position for a rally into the downward trendline around the 13800 level. A break above the downward trendline would open the door for a much bigger rally into new highs.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the strong support we had around the 13365 level where we had also the confluence with the 50% Fibonacci retracement level and the red 21 moving average. The sellers will need the price to fall below this support level to invalidate the bullish setup and position for a drop into new lows.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the break above the counter-trendline brought even more buyers into the market as it acted as a confirmation for a successful bounce and a possible extension to the 13800 level. We now have two key levels to watch:
- The resistance around the 13617 level, where a break to the upside should increase the bullish momentum and take the Nasdaq Composite into the 13800 level.
- The support around the 13500 level, where the buyers are likely to step in in case we get a pullback. A break below this level would see more sellers entering the market and targeting the break below the 13365 support.
Upcoming Events
Today we will get the US Retail Sales data and it will be interesting to see if consumer spending has weakened or it’s still holding on. On Thursday, we will get the US Jobless Claims report and we will also hear from Fed Chair Powell with the market focused on any hint about the near term policy outlook.
