Yesterday, the Nasdaq Composite opened lower but finished the day positive following another hot US CPI report. The data has pushed rate cuts expectations further out with the market now pricing in less rate cuts than the Fed’s dot plot. The Treasury yields skyrocketed across the board putting some pressure on the stock market. Now the market might even think that the economy is still doing great, and the Fed is not going to hike anyway, but there are now good reasons to see a bigger correction to the downside, so the bulls should be extra careful.
Nasdaq Composite Technical Analysis – Daily Timeframe
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 recently broke out of the rising wedge which opened the door for a bigger correction into the 14477 level. We got stuck in a consolidation around the highs for quite some time lately and will likely need a break on either side of the range to trigger a more sustained move.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been hovering around the critical 16206 level. If the price were to continue lower and fall below the 16206 level again, we can expect the sellers to pile in more aggressively to extend the drop into the first support level at 15929. That’s also where we can expect the buyers to step in with a defined risk below the support to position for a rally back into a new all-time high.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the price getting rejected several times from the black counter-trendline except the fakeout on the 4th of April. A break above the 16350 level will see the buyers piling in more aggressively to extend the rally into a new all-time high. Conversely, a break below the yesterday’s low at 16100 should trigger a quick selloff into the 15929 support.
Upcoming Events
Today we get the US PPI report and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment survey.
