Nasdaq Technical Analysis – The bulls take charge as trade war fears ease

Fundamental
Overview

This week has been all
about tariffs. On Monday we opened with a big gap lower as Trump followed
through with his tariffs threats and imposed them on Canada, Mexico and China
over the weekend.

As it’s been the case for
previous tariffs actions though, the market started to cautiously fade the
reaction in expectation of some kind of a deal. That’s exactly what happened as
we got the news on Monday afternoon that the tariffs on Mexico were paused for
30 days after positive negotiations.

The market bounced back
immediately, and the bulls started to build their positions with more
conviction. There’s still the question with China but given that China’s
response has been very soft and we haven’t got any negative news yet, the
market is keeping with the optimism.

The focus now switched to
the US NFP report tomorrow. The labour market data throughout January has been
good, so we might see an overall good NFP report as well. The focus remains on
inflation for the Fed, so even if we get a strong NFP, it shouldn’t change the
Fed’s stance and two rate cuts by the end of the year will continue to remain
the baseline.

Nasdaq
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Nasdaq has been stuck in a big range for almost three months now.
The market participants will continue to play the range until we get a breakout
on either side as that will likely increase the momentum and give us the next
impulse.

Nasdaq Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action between the 21000 support and the 22115 resistance. The sellers will likely
step in again around the resistance to position for a drop back into the
support, while the buyers will look for a break higher to extend the rally into
the 22426 level next.

Nasdaq Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a nice support zone around the 21680 level where we can also
find the upward trendline for confluence. If we get a pullback into the
support, we can expect the buyers to step in with a defined risk below the
trendline to position for the break above the resistance. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into the 21000 support. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the latest US Jobless Claims figures, while
tomorrow we conclude the week with the US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.