On the daily chart below for the
Nasdaq, we can see that we got the first negative close last Friday after
several big positive days. The culprit was a negative
news about debt ceiling talks being at a stalemate. We can also see that the
rally stalled at an old swing level that should act as resistance going
forward.

The Nasdaq should still have an
upward bias as the bullish
flag pattern is still playing out perfectly. As things stand, we may keep on
trading on the classic “buy the rumour” playbook as the market expects that
eventually the debt ceiling will be raised. The target of the bullish flag is
the 13000 area with the 13174 high being a nice level to look at.

Nasdaq Technical Analysis

On the 4 hour chart below, we can
see that the month long range beneath the strong 12274 resistance was breached and once the price
retested the broken resistance
turned support, the Nasdaq rallied strongly to the next
resistance at 12660. We now have a trendline that will act as support in case
the Nasdaq makes a deeper pullback to the downside.

On the 1 hour chart below, we can
see that in case we get a pullback from here, the downside should be limited
for the Nasdaq. In fact, we have a minor trendline and Fibonacci
retracement levels that will act as support for the buyers
looking to position for another rally towards the 13000 level. On an even
deeper correction, the buyers should be leaning on the major trendline and the
12274 support as the last line of defence.

The sellers, on the other hand,
are likely to pile in if the Nasdaq breaks below the minor trendline targeting
the major one. If the price falls below the major trendline, then the sellers
should really come in aggressively and target the 11900 support.

This article was written by ForexLive at www.forexlive.com.