Nasdaq Composite Technical Analysis

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.

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