The Nasdaq Composite surged to new highs following
the miss in the US CPI report.
Looks like the market is still trading based on the inflation and interest
rates expectations and ignoring the softening in the labour market and growth
data. Yesterday, the US Retail Sales were
more tepid compared to the prior months, but they still came out better than
expected, and the US PPI data
missed forecasts by a big margin across the board. The bears are having a hard
time to fight this positive sentiment and perhaps it will take a clear uptrend
in the unemployment rate to switch the market’s focus.
On the daily chart, we can see that the Nasdaq Composite
reached the key swing level at 14155 after an incredible rally following the
miss in the US CPI report. The price looks overstretched as depicted by the
distance from the blue 8 moving average. In such
instances, we can generally see a pullback or some consolidation before the
next move. The sellers are likely to step in here with a defined risk above the
level to position for a drop back into the 13700 support.
On the 4 hour chart, we can see that in case we get
a pullback, the buyers might want to lean on the upward trendline where
they will also find the blue 8 moving average for confluence. The
sellers, on the other hand, will want to see the price breaking below the
trendline to increase the bearish bets into the 13700 support.
On the 1 hour chart, we can see that the price
is diverging with
the MACD right
at the key resistance. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. We can also see that the buyers will have
the confluence with the 38.2% Fibonacci
retracement level and the red 21 moving average
around the trendline. If the price breaks below the trendline, the bullish
setup would be invalidated, and the buyers will likely wait at the 13700
Today the market’s focus will be on the latest US
Jobless Claims figures given the recent softening in the labour market data.