Nasdaq Composite Technical Analysis | Forexlive

The Federal Reserve surprised the market by maintaining
interest rates at 5.00-5.25%, while increasing the projected terminal rate in
the Dot Plot by 50 basis points. In order to assess additional economic data,
the Fed chose to pause at this meeting before making a decision on a potential
interest rate hike in July. This decision appears to be justified due to the
weaker details in the latest NFP report and further disinflation in the
latest CPI report, although the core readings remain
persistently high.

During the press conference,
Fed Chair Powell acknowledged that the July meeting is “live,”
although he refrained from making any definitive commitments. Initially, the
market reacted negatively to the Dot Plot release, resulting in a decline, but
quickly regained its original levels once Powell’s press conference got
underway. Overall, this indicates that the Federal Reserve is prepared to take
further action to combat inflation, with the ultimate course of action
dependent on economic data.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that that after
breaking the key 13174 resistance, the
Nasdaq Composite took off and extended the rally to the 13658 high as more FOMO
kicked in. The next big resistance stands at 14650, so there’s a big room to
the upside if the bullish trend remains intact. This will of course depend on
the economic data, with the labour market reports probably being the most
important given the Fed’s focus on the jobs data.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have the moving averages acting
as dynamic support for the buyers. As long as they remained crossed to the
upside, we can expect the bullish momentum to continue. A crossover would
signal a switch to a more bearish bias that could lead to a bigger pullback or
a reversal, so that is something to keep an eye on.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
Nasdaq Composite has recently bounced from a minor upward trendline and
the red 21 moving average. This was caused by the quick spike down after the
dot plot and then a quick rally back to the original levels as Fed Chair Powell
started to speak.

The buyers may keep on piling in at every
break of the high, but as we can see by the divergence with
the MACD, the
momentum is weakening, and a pullback may be due. From a risk management
perspective, the buyers may be better off leaning on the major upward trendline
roughly at the 12800 level before another push to the upside. The sellers, on
the other hand, may pile in at the break of the minor upward trendline to
target the major trendline first and a break lower next.

Today, we will have the US Jobless Claims and Retail
Sales reports. Tomorrow, the attention will turn to the University of Michigan
Consumer Sentiment survey. A big miss in the Jobless Claims data could
potentially indicate trouble for the market, suggesting a rapid deterioration
in the labour market. Conversely, if the data beats expectations, it should
help sustain the market’s positive trend. Additionally, market participants
will be eager to see a decrease in long-term inflation expectations in
tomorrow’s UMich report, as a higher reading might suggest that inflation
expectations are becoming un-anchored.