The Nasdaq has been experiencing a decline recently, particularly after the US CPI report on July 11th. Initially, there was a shift from big cap stocks to small cap stocks, but the bearish momentum intensified, leading to a 10% decline in the index. This downward trend may have been influenced by deleveraging due to the strengthening Yen, impacting various markets. The upcoming BoJ Policy Decision could potentially reverse this trend.
Despite these recent fluctuations, the market still anticipates at least two rate cuts by the end of the year, with a chance of a back-to-back cut in November. The US economy seems resilient with inflation gradually moving back to target, supporting a soft-landing narrative and positive risk sentiment as the Fed plans to cut rates amidst steady growth.
Looking at the technical analysis of the Nasdaq, on the daily chart, the index retraced to a major trendline around the 18900 level, accompanied by the 50% Fibonacci retracement level, where buyers entered the market with defined risk. A break below this trendline could lead to further bearish movement, while a rally could push the index to a new all-time high.
On the 4-hour chart, a downward trendline indicates the current bearish momentum. Sellers may target this trendline for a break below the major trendline, while buyers will seek a break above it for a new all-time high. The 1-hour chart shows higher highs and higher lows, suggesting bullish momentum. Buyers may take advantage of dips near the trendline, while sellers could target the downward trendline for bearish bets.
Upcoming catalysts such as the US Job Openings, Consumer Confidence reports, BoJ Policy Decision, FOMC Policy Decision, US Jobless Claims figures, ISM Manufacturing PMI, and US NFP report could further impact the market in the coming days. Investors should closely monitor these events for potential trading opportunities and market reactions.
