Nasdaq Composite Technical Analysis

Yesterday, the Nasdaq Composite ended another day
negative as the market was caught between the uncertainty around the labour
market following the NFP report and the risk of the US CPI data. The US
CPI today beat expectations slightly, but the markets faded the reaction
quickly and ended basically at the pre-release levels. The technicals in this
case will be helpful in gauging the most likely direction as we approach key
levels.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite failed to extend the rally after making a new all-time high as the
price got smacked back down following the NFP report. From a risk management
perspective, 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 leg higher diverged with the MACD and we got a break below the minor
upward trendline. 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

On Thursday 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.