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KEY POINTS:Nasdaq price action remains rangebound but with a bullish biasPullback in Fed support turned the focus heavily towards dataReaction to negative labour market data likely to reverse in 2026 as inflation remains a constraint for the FedFUNDAMENTAL
OVERVIEWSince the peak in late October,
the Nasdaq has been bouncing around as the overstretched long positioning was
met with a less dovish Fed. The market maintains the bullish bias amid a strong
economy and the Fed’s dovish reaction function, but lacks the momentum seen in 2025
when Trump pulled back on aggressive tariffs and the Fed was in a clear easing
mode. This year the main risk for
the bullish outlook is inflation. The “run it hot” narrative continues to
underpin stocks, and we’ve seen from the latest GDP report and the Atlanta Fed
GDPNow how the economy looks to be accelerating. That hasn’t translated into
persistent inflationary pressures besides the tariff driven spike in the
summer. I have a feeling that US CPI
will be more important in the next months because inflation worry is what is
constraining the Fed from acting more quickly and with more conviction on rate
cuts. In fact, while weak labour market data was seen as positive for the stock
market on expectations of more Fed cuts, this year it might be seen as negative
if it comes with higher CPI data due to the above-mentioned constraint.NASDAQ TECHNICAL
ANALYSIS – DAILY TIMEFRAMEOn
the daily chart, we can see that
the Nasdaq has been compressing into a rising wedge. These types of patterns can resolve into a downside breakout taking the
price to the base of the wedge or an upside breakout leading to a strong rally
after the consolidation.NASDAQ TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAMEOn
the 4 hour chart, we can see more
clearly the recent choppy price action that formed the rising wedge. From a
risk management perspective, the buyers will have a better risk to reward setup
around the bottom trendline to position for a rally into new 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 base of the wedge around the 24900 level.NASDAQ TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum
on this timeframe. The buyers will likely continue to lean on the trendline to
keep pushing into the top trendline of the wedge, while the sellers will look
for a break lower to extend the drop into the bottom trendline. The red lines
define the average daily range for today.UPCOMING CATALYSTSToday we conclude the week with the US NFP report and potential US Supreme
Court decision on Trump’s tariffs.
This article was written by Giuseppe Dellamotta at investinglive.com.
💡 DMK Insight
The Nasdaq’s rangebound movement with a bullish bias signals potential volatility ahead. Traders should note that the recent pullback in Fed support is shifting focus to economic data, especially labor market indicators. The market’s reaction to negative labor data could be short-lived, with expectations that inflation will continue to constrain Fed policy into 2026. This creates a scenario where traders might want to position themselves for a breakout, especially if the Nasdaq can hold above key support levels established since late October. Watch for any significant economic releases that could sway sentiment, as they may trigger a decisive move. On the flip side, if inflation data continues to disappoint, it could lead to a more prolonged rangebound scenario, keeping traders on their toes. Keeping an eye on the 13,000 level could be crucial, as a break below that might signal a shift in sentiment.
📮 Takeaway
Monitor the Nasdaq’s performance around the 13,000 level for potential breakout opportunities, especially in light of upcoming labor market data.
