Nasdaq Composite Technical Analysis

The last week was incredible for the Nasdaq
Composite with the index rallying for five consecutive trading days. The bulk
of the rally came after the FOMC rate decision where the Fed left interest rates unchanged and Fed
Chair Powell delivered less hawkish than expected remarks. The
Nasdaq Composite then extended the gains into the weekend after the NFP report
missed forecasts and the ISM Services PMI came
lower than expected.

One may think that the stock market sees a soft
landing and the fall in Treasury yields is a good thing. Unfortunately,
Treasury yields fell likely because the bond market sees more weakness to come
in the next few months given the softening in the labour market. So, the rally
we’ve seen out of the disappointing data is likely to be misplaced and the
market might correct that soon.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite erased most of the losses of the past two weeks and reached the key trendline around
the 13450 level. We can notice that the price is now overstretched as depicted
by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we got some
selling into the close before the weekend. We can also notice that the price is
overstretched even on this timeframe. The sellers are likely to step in with a
defined risk above the high to position for a drop back into the 13174 support. The
buyers, on the other hand, will be better off to wait for a pullback instead of
chasing the rally at these levels.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a nice support zone around the 13174 level where we can find the confluence with
the upward trendline, the red 21 moving average and the 38.2% Fibonacci
level. This is where the buyers are
likely to pile in with a defined risk below the trendline to position for a
break above the major trendline. The sellers, on the other hand, will want to
see the price breaking lower to increase the bearish bets and target a new low.


This week is pretty empty on the data front with just
the US Jobless Claims on Thursday and the University of Michigan Consumer
Sentiment on Friday. The market is likely to focus on the past week events and
will be eager to see the US Jobless Claims on Thursday given the recent weakness
in the labour market data.

This article was written by FL Contributors at

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