Yesterday, the Nasdaq Composite opened the day lower
but traded mostly higher into the close. The market got pressured by the strong
US ISM Manufacturing PMI report
on Monday which gave a boost to the US Dollar and Treasury yields. Inflation is
gradually becoming again the threat for further gains and the expectations for
rate cuts continue to dwindle with the market now being much less certain on a
rate cut in June. These fears might end up in some general profit-taking into
the US CPI report next week as another hot release could really spook the
market and trigger a change in the Fed’s stance.
Nasdaq Composite Technical
Analysis – Daily Timeframe
Nasdaq Composite Daily
On the daily chart, we can see that the Nasdaq
Composite has
been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. The price yesterday broke out of the rising wedge and
bounced on the key 16206 level where we have also the red 21 moving average for confluence. This
is a critical support zone as a continuation to the downside should trigger a
major correction with the 14500 level as the ultimate target.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
Nasdaq Composite 4 hour
On the 4 hour chart, we can see that the
price bounced on the 16206 level where we can also find the 61.8% Fibonacci
retracement level for confluence. The buyers should
step in around this level with a defined risk below it to position for a rally
into a new all-time high. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into new lows.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
Nasdaq Composite 1 hour
On the 1 hour chart, we can see more
closely the recent price action with the big negative gap yesterday and the
bounce on the critical support zone.
We now have a resistance zone around the 16300 level where we can find the
confluence of the red 21 moving average and the two trendlines. This
is where the sellers are likely to step in with a defined risk above the top
trendline to position for a break of the support with a better risk to reward
setup. The buyers, on the other hand, will want to see the price breaking above
the top trendline to invalidate the bearish setup and increase the bullish bets
into new highs.
Upcoming
Events
Today the US ADP and the US ISM Services PMI. Tomorrow,
we get the latest US Jobless Claims figures while on Friday we conclude the
week with the US NFP report.