Fundamental Overview
This week has been all about tariffs. On Monday we opened with a big gap lower as Trump followed through with his tariffs threats and imposed them on Canada, Mexico and China over the weekend.
As it’s been the case for previous tariffs actions though, the market started to cautiously fade the reaction in expectation of some kind of a deal. That’s exactly what happened as we got the news on Monday afternoon that the tariffs on Mexico were paused for 30 days after positive negotiations.
The market bounced back immediately, and the bulls started to build their positions with more conviction. There’s still the question with China but given that China’s response has been very soft and we haven’t got any negative news yet, the market is keeping with the optimism.
The focus now switched to the US NFP report tomorrow. The labour market data throughout January has been good, so we might see an overall good NFP report as well. The focus remains on inflation for the Fed, so even if we get a strong NFP, it shouldn’t change the Fed’s stance and two rate cuts by the end of the year will continue to remain the baseline.
Nasdaq Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq has been stuck in a big range for almost three months now. The market participants will continue to play the range until we get a breakout on either side as that will likely increase the momentum and give us the next impulse.
Nasdaq Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action between the 21000 support and the 22115 resistance. The sellers will likely step in again around the resistance to position for a drop back into the support, while the buyers will look for a break higher to extend the rally into the 22426 level next.
Nasdaq Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a nice support zone around the 21680 level where we can also find the upward trendline for confluence. If we get a pullback into the support, we can expect the buyers to step in with a defined risk below the trendline to position for the break above the resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 21000 support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the US NFP report.
