Last week, the risk sentiment started on a positive note at the beginning of the week due to the lack of a ground offensive in Gaza. Unfortunately, things went south from Wednesday onwards as Israeli PM Netanyahu delivered a speech where he said that they were preparing for a ground invasion.
Moreover, the US Jobless Claims data on Thursday showed another big miss in Continuing Claims, which might be an indication that the labour market is weakening. On Friday, the risk sentiment deteriorated further as market participants likely didn't want to hold long positions into the weekend, especially after early reports of the start of the invasion.
Over the weekend we got reports of a ground offensive being indeed underway. We will see how things will evolve during the week, but the market will also have lots of important economic data to digest.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite broke below many key levels with the sellers now targeting the 12274 support. The buyers don’t have much to lean on to position for a rally, but we can expect them to step in around the 12274 level with a defined risk below the support to target a bounce back into the 13174 resistance.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we now have a strong resistance zone around the 12800 level where we can find the confluence of the broken bottom trendline, the minor downward trendline, the previous swing low level and the Fibonacci retracement levels. This is where the sellers should step in with a defined risk above the resistance zone to target a drop into the 12274 level. The buyers, on the other hand, will want to see the price breaking above the resistance to pile in and position for a rally into the 13174 level.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the strong resistance zone around the 12800 level. This is a great spot where the sellers should pile in to position for another drop into new lows. It will be a tough job for the buyers to break above this resistance without a strong positive fundamental catalyst.
This week, we will get lots of tier one data points with the US labour market and the FOMC decision in focus. Tomorrow, we have the US Employment Cost Index and the Consumer Confidence report. On Wednesday, it will be the time for the US ADP, the ISM Manufacturing PMI and the FOMC rate decision. On Thursday we will get the US Jobless Claims data, while on Friday we conclude the week with the US NFP report and the ISM Services PMI.