Yesterday, the Nasdaq Composite opened higher as we took some risk on sentiment following the announcement of a de-escalation between Iran and Israel following Iranian retaliation. The market was under pressure at the open as US retail sales far exceeded expectations with positive revisions from previous figures. The data continues to heat up and therefore pushes back expectations for rate cuts. In the second half of the trading session, we learned that Israel intended to retaliate soon, triggering a new wave of de-risking flows that led to key technical breakouts exacerbating the sell-off.
Nasdaq Composite Technical Analysis – Daily Timeline
Nasdaq Composite Daily
On the daily chart, we can see that the Nasdaq Composite sold off to the first key support level at 15929 following strong US retail sales and geopolitical news. This is where we can expect buyers to step in with defined risk below the level to position themselves for a rally to a new all-time high. Sellers, on the other hand, will want to see the price fall to increase bearish bets until the next support at 15453.
Nasdaq Composite Technical Analysis – 4 Hour Timeframe
Nasdaq Composite 4 hours
On the 4-hour chart, we can see that price broke out of the 3-week long range and triggered more bearish momentum as sellers rallied more aggressively to target a breakout below the 15929 support. After the breakout of the ascending wedge, the market has started to swing from the highs and the chances of seeing a correction to the base of the pattern at 14477 are increasing by the day.
Nasdaq Composite Technical Analysis – 1 Hour Timeframe
Nasdaq Composite 1 hour
On the hourly chart we can see that we now have a trendline defining the current bearish momentum where we can find the confluence of the 38.2% Fibonacci retracement level and the blue 8 moving average. It is there that we can expect sellers to step in with defined risk above the trendline to position themselves at new lows. Buyers, on the other hand, will want to see the price move higher to increase bullish bets to a new all-time high.
Events to come
This week is a bit empty on the data front with only one notable report available on Thursday as we get the latest US jobless claims numbers. Also be wary of hawkish signals from Fed speakers throughout the week and from Fed Chair Powell today.
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