Last week we saw some risk aversion in the market as tensions in the Middle East intensified. In fact, early in the weekend, the bearish momentum deepened when ABC reported that the Israeli military had been given the “green light” to enter Gaza as soon as it was ready. Since we didn’t see any ground attacks this weekend, we might see a relief rally today.
Nasdaq Composite Technical Analysis – Daily Timeline
On the daily chart, we can see that the Nasdaq Composite “confirmed” the downside breakout as the price fell not only below the key trendline, but also below key support around the 13174 level. Sellers now have a strong chance of reaching support at 12274, where we will see buyers step in more strongly to position themselves for a rally towards the 13174 level.
Nasdaq Composite Technical Analysis – 4 Hour Timeframe
On the 4 hour chart we can see that the Nasdaq Composite is now at previous lows and this is where we can expect buyers to pile in with risk set below the low to position for a relief rally today into broken support turned resistance. and hoping for an upward breakout.
Nasdaq Composite Technical Analysis – 1 Hour Timeframe
On the hourly chart we can see that from a risk management perspective, sellers would be better off waiting for price to move back into the trendline where the confluence with the Fibonacci retracement level can be found by 38.2%, with red 21 moving. average and the previous support became resistance. Buyers, on the other hand, will want to see the price continue higher to invalidate the bearish setup and increase bullish bets on the next resistance around the 13400 level.
Events to come
Tomorrow we will have the US PMIs and the market may not like the bad numbers given the fragility of risk sentiment. On Thursday we will see data on US jobless claims and continuing claims showing some weakness in the job market recently. Finally, on Friday we will receive the US PCE report, which should not change anything for the Fed at the moment.