The Nasdaq Composite yesterday rejected the key
resistance around the 13700 level as we got another confirmation of a weakening
US labour market with a further increase in Continuing Claims.
Moreover, Fed Chair Powell
delivered what was perceived as a more hawkish than expected speech as the Fed
wants to keep another rate hike on the table. Late in the day, we also got one
of the worst 30yr bond auction in
history that sent Treasury yields higher and weighed on sentiment.
On the daily chart, we can see that the Nasdaq Composite
got rejected from the key resistance around
the 13700 level where we had also the confluence with the trendline. The
rally was overstretched anyway as depicted by the distance from the 8 blue moving average, so a
pullback is unlikely to scare the buyers at this point.
On the 4 hour chart, we can see that the sellers
leant on the resistance with a defined risk above it to position for a drop
back into the lows. The first support for the buyers stands around the broken black
trendline where a fall below it should trigger another bearish wave. The buyers
will need the price to break above the 13700 resistance to start targeting the
high at 14450.
On the 1 hour chart, we can see that the price
has been diverging with
the MACD right into
the key resistance. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. We indeed got a pullback, which should
continue into the support zone around the broken black trendline highlighted by
the green box. If the price breaks below the support, a reversal would be
confirmed, and the sellers will pile in with even more conviction.
Today the only market moving event will be the
release of the University of Michigan Consumer Sentiment report.