Yesterday, the Fed left interest rates unchanged as expected with basically no change to the statement. The market was fearing some hawkish stuff, but we didn’t get any. In fact, the Dot Plot showed still three rate cuts for this year and the economic projections were all upgraded with growth and inflation higher and the unemployment rate lower. Moreover, during the press conference, Fed Chair Powell didn’t sound hawkish, on the contrary, he was fairly neutral. This gave the Nasdaq Composite the green light for a rally as the risk sentiment turned very bullish.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite yesterday finally managed to break through the key 16206 resistance following the Fed decision. The buyers will now likely keep piling in targeting the top trendline around the 16700 level. The sellers, on the other hand, should wait for a change in risk sentiment and a breakout to the downside before considering new positions.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. We continue to trade inside the rising wedge, so if the price were to break below the trendline, the sellers will have much more conviction to look for new lows with the base of the wedge at 14477 being the ultimate target. For now, the buyers remain in control and the target for the rally should be the top trendline.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the breakout of the resistance. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where they will also find the resistance turned support and the red 21 moving average for confluence. The sellers, on the other hand, will want to see the price breaking lower to position for a break below the major trendline with a better risk to reward setup.
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Today we get the latest US PMIs with no other notable events until next week.
