Nasdaq Composite Technical Analysis

Yesterday, the Nasdaq Composite surged and ended
the day positive following the US CPI release.
Although the data beat expectations slightly, the market’s pricing for rate
cuts didn’t change much as the overall weaker data in February is giving the
market hope that the reacceleration in the prior months was transitory and that
inflation will not flare up again. Looking ahead we don’t have much key data
left before the FOMC meeting next week, but there are some expectations that
the Fed might sound less dovish following the two consecutive beats in the CPI
data and that could trigger some profit taking and defensive positioning into
the event.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite yesterday bounced on the red 21 moving average and
rallied back to the highs. From a risk management perspective though, the
buyers will have a much better risk to reward setup around the 15876 level
where we can find the confluence of the trendline and the
red 21 moving average. The sellers, on the other hand, will want to see the
price breaking lower to invalidate the bullish setup and increase the bearish
bets into new lows.

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 can also notice that the price action formed what
looks like a 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.

Nasdaq Composite
Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
latest rally into the all-time high diverged with the MACD. The target is
generally the base of the divergent formation, so this should confirm a
pullback into the major trendline where we can also find the 61.8% Fibonacci
retracement level for confluence. What happens there
will be key as a break below the trendline could lead to a major correction.

Upcoming
Events

Tomorrow we get the US PPI, the US Retail Sales and the
US Jobless Claims figures. On Friday, we conclude the week with the University
of Michigan Consumer Sentiment survey.

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