The Nasdaq Composite seems to be bottoming out as
the US data continues to support the soft landing narrative with Jobless Claims last
week beating once again expectations and the ISM Manufacturing PMI
yesterday showing signs of rebounding. The fears of a hawkish Fed might be put
aside if the economy remains resilient and the labour market doesn’t
deteriorate too much.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite rallied back above the key resistance around
the 13174 level. The last week’s breakout is starting to look like a fakeout,
which is a reversal pattern, and we might see a rally into the black trendline around
the 13800 level. A break back below the 13174 level would be ominous for the
buyers and we should see the sellers pile in aggressively to position for a
drop into the 12274 support.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price is
struggling at a strong resistance defined by the 38.2% Fibonacci retracement level
and the red 21 moving average. This is
where the sellers are stepping in with a defined risk above the Fibonacci level
to target another break below the 13174 support. The buyers, on the other hand,
will want to see the price breaking higher to pile in and target the black
trendline.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we had
a divergence with
the MACD right
after the breakout. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, we might be in front of a
reversal as the price action has also formed what looks like an inverted head and shoulders
pattern. The neckline is right around the 38.2% Fibonacci retracement level so
a break above it should trigger a rally into the highs. The sellers will need
the price to sell off from here to invalidate the bullish setup and position
for new lows.

Upcoming
Events

Today, we will have the US Job Openings data which
led to a strong rally the last time as the big miss made Treasury yields to
fall due to less labour market tightness and less hawkish Fed expectations. Tomorrow,
it will be the time for the ADP report and the ISM Services PMI. On Thursday,
we will see the Jobless Claims data, which continues to show a solid labour
market. Finally on Friday, it will be the time for the NFP report which is the
only one the Fed will see before its next rate decision.

This article was written by FL Contributors at www.forexlive.com.

• The nerves are kicking in again in the equities space
• USD/JPY within touching distance of 150 as higher yields continue to pave the way
• AUD/USD stays under pressure as RBA stays on the sidelines
• Recent pace of yen fall makes intervention less likely – former top currency diplomat
• ECB’s Lane: Progress to 2% inflation won’t be as quick as to 4%
• ECB’s Lane: The key is to maintain rates at this level for as long as needed
• ECB’s Simkus: Inflation is on its way down
• Switzerland September CPI +1.7% vs +1.8% y/y expected

Markets:

• USD leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.3%
• US 10-year yields up 4.6 bps to 4.730%
• Gold down 0.2% to $1,824.38
• WTI crude down 0.5% to $88.38
• Bitcoin down 1.1% to $27,541

There wasn’t much in terms of headlines during the session as the focus stays on the bond market. Treasury yields are running higher once again and that is leading to a further bid in the US dollar, with USD/JPY sitting within a whisker of touching the 150 mark.

The greenback held firmer throughout with EUR/USD hovering near its lowest since December last year at 1.0460-70 levels. The antipodeans are the laggards, with AUD/USD down 1.0% to touch 0.6300 after the RBA left the cash rate unchanged in today’s policy decision.

A turn lower in the risk mood, similar to yesterday, is not helping as equities hit the skids after a decent start to the session. S&P 500 futures were up 0.2% at one point but are seen down over 0.3% on the day at the lows. European indices are also back in the red as the jitters are resurfacing amid further selling in the bond market as well.

It’s back to the familiar theme for broader markets, continuing the trend that we have been seeing since mid-September.

This article was written by Justin Low at www.forexlive.com.