Nasdaq Composite Awaits Break from Triangle Consolidation, Eyes on US GDP Growth and Earnings

On Wednesday, the U.S. stock indices exhibited a short-term bearish inclination, with the Nasdaq Composite Index trading lower amid a constricted range. Investors’ cautious stance prevails as they anticipate fresh insights into economic growth due later today and inflation dynamics from the U.S. and Europe later in the week. The winding down of the earnings season post a flurry of reports from leading U.S. corporations sets the stage. Notably, Salesforce’s impending post-market quarterly disclosure is forecasted to showcase a revenue surge to $9.22 billion, potentially marking a return to profitability after prior restructuring-induced losses, a development likely to buoy the Nasdaq.

Technical Analysis:

The Nasdaq Composite has been navigating through a tightening triangle pattern on intraday chart since peaking at historical top on February 23, underpinned by a delicate equilibrium between buying and selling forces. A breach below the key support at 17,896.25 could intensify selling pressure, targeting the lower spectrum between 17,866.97 and 17,828.32. The Relative Strength Index (RSI) dipping into the selling territory below 45 accentuates the bearish momentum, while the Moving Average Convergence Divergence (MACD) remains indeterminate regarding the current rangebound.

Alternative Outlook:

On the flip side, a resurgence of persistent bullish momentum, capable of propelling the index above the triangle’s base, could shift focus towards immediate resistance at 18,006.35. A sustained move beyond this threshold may challenge further resistance levels at 18,036.80 and 18,069.59, potentially reinstating the prior uptrend.

Key Economic Indicators:

Today’s spotlight falls on the U.S. GDP Growth report, pivotal for shaping further rate cut expectations. Additionally, weekly adjustments in crude oil reserves and the January goods trade deficit may impact the energy sector and prompt capital reallocation across industries, influencing broader fluctuations in market indices.

Technical Indicators:

• RSI: Bearish – Indicates potential continuation of the downward trend.
• MACD: Neutral – Lacks clear directional bias.
• Moving Averages: Bearish – Suggests a prevailing downtrend momentum.

Analysis Summary:

The Nasdaq Composite Index’s current consolidation within a triangle pattern points towards a crucial juncture. The current technical setup, combined with impending earnings and economic reports, presents a complex landscape for market participants. Monitoring these key factors will be essential for navigating the anticipated market volatility and identifying potential opportunities in the days ahead.

Technical Levels:

• Resistance Levels: R1: 18,006.35, R2: 18,036.80, R3: 18,069.59
• Support Levels: S1: 17,896.25, S2: 17,866.97, S3: 17,828.32