This week started like the last one with a broader rally in the markets as the risk sentiment got supported by another lack of a ground operation in Gaza over the weekend and the positive news about a couple of hostages being released. Yesterday, on the other hand, we got the complete reverse with the markets opening lower and selling off for no apparent reason except a reaction to some key resistance levels. The selloff accelerated in the evening as the Israeli PM Netanyahu said that they were preparing for a ground invasion. Will we see another selloff into the weekend?
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite rejected the key 13174 level and sold off back into the bottom trendline. This is where we can expect the buyers to step in again with a defined risk below the trendline to position for a rally back into the 13174 level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a divergence with the MACD right at the bottom trendline. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it’s another layer of confluence for the buyers but if the price breaks below the trendline, the bullish setup would be invalidated and the sellers will increase the bearish bets into the 12274 level.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the price action at the trendline and we can notice that we indeed got already some reaction from it yesterday. From a fundamental perspective, the Nasdaq Composite is more likely to fall due to very high geopolitical risk, especially into the weekend as the market might want to keep it safe, but watch out for good news as they could trigger strong relief rallies.
Upcoming Events
Today, we will see the US Jobless Claims data with the market likely focusing on the Continuing Claims figures as they’ve been recently showing some softness. The market may not like bad data given the fragile risk sentiment. Tomorrow, we will get the US PCE report, which is not expected to change anything for the Fed at this point in time.
