Nasdaq Composite Technical Analysis

Yesterday, the Nasdaq Composite closed the day
negative as the price retreated from overstretched levels reached after the Fed
decision. We also got another slate of strong US data yesterday with the US Jobless Claims beating
expectations and the US Manufacturing PMI
increasing further into expansion. The comments in the PMI report were a bit
worrying as there were mentions of steep rise in costs and strengthened
pricing power amid the recent upturn in demand. This pushed the overall
selling price inflation for goods and services up to the highest levels for
nearly a year. The next inflation report will be crucial for the market as
another beat will likely be taken as very bad news at this point.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite yesterday retreated from the all-time high as the market pulled back
from the overstretched rally triggered by the FOMC decision. There’s not much
we can glean from this timeframe, so we need to zoom in to see some more
details.

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 continue to trade inside the 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. For now, the buyers remain in
control, so we should find them around the bottom trendline targeting the top
trendline.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see the recent
breakout of the resistance. From a risk management perspective, the buyers will
have a much better risk to reward setup around the trendline where they will
also find the red 21 moving average and
the Fibonacci
retracement levels for confluence. The
sellers, on the other hand, will need to wait for the break of the major
trendline before considering new positions.

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