Last week, FOMC decided to temporarily stop the tightening cycle and set it at 5.00-5.25%. The reason for this move was their intention to gather more economic data before proceeding with further interest rate hikes. Their goal is to carefully adjust the appropriate level of monetary tightening needed to reduce inflation to the desired 2% target while minimizing any adverse impact on the overall economy. After the FOMC decision, the Nasdaq Composite saw an increase in value the following day, but retreated slightly just before the June long weekend.
Technical Analysis of the Nasdaq Composite – Daily Time Frame
On the daily chart, we can see that the Nasdaq Composite has extended its rally well above resistance at 13174. This breakout has opened the door for a move up to resistance at 14649, and if the disinflationary trend continues without too much pain in the labor market, we will likely see that happen.
Nasdaq Composite Technical Analysis – 4 Hour Time Frame
On the 4-hour chart we can see that moving averages continue to provide dynamic support to buyers. It’s a really tough environment for sellers because there’s no clear resistance level to lean on. In fact, they may just be waiting for some technical level breakout to build up.
Nasdaq Composite Technical Analysis – 1 Hour Time Frame
On the 1-hour chart, we can see the short-term price action more closely. A break below the swing low at 13660 should see some sellers start to pile in and target a bigger pullback to the 13174 support where we also find 50% Fibonacci retracement level. This is where buyers will look to re-enter the market, all else being equal, targeting the 14649 resistance.
Economic calendar for this week is relatively bare on the data front, although we will hear from many Federal Reserve officials, including Fed Chairman Powell, who will testify before Congress on Wednesday and Thursday. We’ll see another US Jobless Claims report on Thursday, while we finish the week with US PMIs on Friday.