FUNDAMENTAL
OVERVIEW
The Nasdaq has been trading in a tight range this week as traders await the
crucial US CPI report due on Friday. If you recall, the Nasdaq rallied strongly
last Thursday after some dovish Fed’s Waller comments indicated that he would be willing to keep interest rate unchanged at
the September meeting barring a hot CPI.
On Friday, the
price spiked lower after the US NFPsurprised to the upside showing job growth in August almost tripling
the consensus estimate of 56Ka strong. The losses didn’t last long, though, as
most of the NFP-driven moves got faded thereafter.
This happened
because the market focus was not on the NFP report, but on the CPI. The market
pays attention to the data that the central bank is focused on, and the Federal
Reserve is currently focused on inflation.
That’s why we’ve been seeing a rangebound
price action this week as the focus turned to US CPI data. Unless, we get some
surprising breakthrough in US-Iran relations, the price action will likely
remain choppy or a bit negative as traders at some point might start hedging
into the CPI release.
A soft or in-line CPI will likely give the
Nasdaq a boost as Fed’s Waller mentioned that he
won’t consider a rate hike unless we get a hot CPI.
Conversely, an upside surprise in core monthly inflation data could trigger
another selloff as traders will position for a rate hike.
NASDAQ TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On
the daily chart, we can see the Nasdaq found support around the 28,950 level. If the price pulls
back into the support again, we can expect the buyers to step in with a defined
risk below the support to position for a rally into the all-time highs. The
sellers, on the other hand, will want to see the price breaking lower to pile
in for a drop into the July low around the 27,200 level.
NASDAQ TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On
the 4 hour chart, we have a clear
range between the 28,950 support and the 29,800 resistance. The market
participants will likely continue to play the range by buying at support and
selling at resistance until we get a breakout on either side.
NASDAQ TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor support around the 29,470 level which defines the tighter range
that formed in the last week. The sellers will look for short opportunities
around the resistance and on the break of the support, while the buyers will
continue to step in around the support or wait for a break above the
resistance. The red lines define average daily range for today.
UPCOMING CATALYSTS
Tomorrow, we get the
US PPI report and the US Jobless Claims figures. On Friday, we conclude the
week with the US CPI report.
This article was written by Giuseppe Dellamotta at investinglive.com.