Fundamental Overview
The Nasdaq has been stuck in a big range since the last
FOMC decision as the market perceived it as more hawkish than expected.
The Fed continues to place a great deal on inflation progress to proceed with further rate cuts as highlighted by
Fed’s Waller this week. Therefore, the market is waiting for more data to decide what the Fed is going to do next.
A soft CPI report next week will likely trigger a strong dovish reaction in the markets, especially considering the quick rise in Treasury yields in the last couple of months. That should support the stock market and lead to more gains. Conversely, another hot CPI isn’t going to help and could trigger another selloff.
Today, we have the US NFP report and although the CPI is going to have a bigger influence on interest rate expectations, it’s still going to be a market moving event, especially if we get big deviations from the expected numbers.
Right now, the market would want to see soft but not too soft data. A very bad or very hot report could add more pressure on the market. Watch also wage growth, as
Fed’s Bowman highlighted recently that it’s still above the pace consistent with their inflation target.
Nasdaq Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq has been in consolidation mode since the last FOMC decision with the 21000 level acting as a key
support. From a risk management perspective, the buyers will have a better risk to reward setup around the support to position for a rally into new all-time highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows with the 20380 level as the first target.
Nasdaq Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price action has formed what looks like a
descending triangle. The price can break on either side of the pattern but follows next is generally a strong move in the direction of the breakout, so the market participants will wait for that to enter or add more to their positions.
Nasdaq Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action has been compressing as we await the US NFP release. If the price stays above the 21350 level, that would be more bullish and will likely take us to the 21700 level. Conversely, if the price stays below the 21180 level, the sellers will likely push the price into the support and target a break below it. The red lines define the
average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report.
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
