Yesterday, the Nasdaq Composite Index ended the day mostly flat as the market may be waiting for the US CPI release tomorrow before taking a direction. In fact, another hot report could change the Fed’s near-term strategy and trigger a hawkish response that puts more pressure on the stock market. On the other hand, data in line with or even below expectations will likely lead to positive risk sentiment, pushing the market to new highs.
Nasdaq Composite Technical Analysis – Daily Timeline
Nasdaq Composite Daily
On the daily chart, we can see that the Nasdaq Composite has been diverging with the MACD for a long time. This is usually a sign of weakening momentum, often followed by pullbacks or reversals. The price recently broke out of the ascending wedge, which opened the door for a bigger correction towards the 14477 level. The price has been consolidating around the highs for a while now and we will likely have to wait for the US CPI report tomorrow to decide where to go next.
Nasdaq Composite Technical Analysis – 4 Hour Timeframe
Nasdaq Composite 4 hours
On the 4-hour chart we can see that the price rebounded last Friday following the Goldilocks NFP report and is now trading above the critical level of 16206. Should the price continue to decline and fall back Below the 16,206 level, we can expect sellers to move more aggressively to extend the decline to the first support level at 15,929. This is also where we can expect this as buyers step in with defined risk below support to position themselves for a rally to a new all-time high.
Nasdaq Composite Technical Analysis – 1 Hour Timeframe
Nasdaq Composite 1 hour
On the hourly chart, we can take a closer look at the recent price action, with price being rejected several times from the black counter-trend line, with the exception of the counterfeit on the 4th.th From April. We received another rejection yesterday as price continued to consolidate just below the counter-trend line. The market may be waiting for the US CPI release before taking a direction and even if we get a breakout, buyers will need to be careful as a hot report could trigger a sharp sell-off.
Events to come
Tomorrow we will have the US CPI report which will likely decide whether the Fed will further delay rate cuts. On Thursday we will receive the US PPI and the latest US jobless claims figures. Finally, on Friday we wrap up the week with the University of Michigan Consumer Sentiment Survey.
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