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NASDAQ Retreats From 20,000 Ahead Of Important Week – NASDAQ Analysis & Prediction

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  • Published:
nasdaq market analysis 1

Key Points

  • NASDAQ tested 20,000 once again.
  • FOMC minutes on the horizon.
  • Traders looking ahead to NFP day.
  • NASDAQ forming bullish flag?

Market Overview

The NASDAQ paused again last week after whipsaw action saw the tech index test 20,000 once more but traded as low as 19,400. Traders will be looking ahead to important data due out this week to give a clearer picture of where the NASDAQ could be headed next.

Often, any dips in these markets are met with significant buying periods, and there isn’t enough evidence to suggest this time will be any different. However, after two clear rejections from 20,000, are we set for a deeper retracement?

FOMC Minutes On The Horizon

This week is set to be busy, especially in the US, where election debates between Biden and Trump continue. Important data releases, such as the FOMC meeting minutes on Wednesday, are also scheduled. The main point is whether the Federal Reserve will cut twice or once this year.

The most recent dot plot suggested only one rate cut this year. However, if the FOMC meeting minutes suggest that two cuts are still on the table, this will likely buoy risk assets such as the NASDAQ. However, if the minutes seem to rule out the potential of two cuts, this could be the start of a deeper retracement.

Traders Looking Ahead to NFP Day

In what surely will be billed as the “event of the week,” Non-Farm Payrolls will likely significantly influence the direction of the NASDAQ this week. On the first Friday of the month, traders will have access to a very important US employment statistics report. The figure that will grab the headlines is the Non-Farm Employment Change, which surprised the upside last month after a big drop in May.

The forecast is for 189,000 jobs to be added to the US economy last month, which would be a steady fall from 272,000 in the previous reading. Often, we see the previous figure revised, so be mindful of that when Friday comes. Generally, if the figure isn’t too skewed in one direction, the NASDAQ could end the week strong. The perfect scenario for this would be a figure that shows a weakening of the labour market without it being too drastic, such as 200,000. 

NASDAQ Forming Bullish Flag?

The rejections from 20,000 on the NASDAQ have been aggressive, with the market falling at least 300 points on both occasions when trading at the key milestone level. This is likely due to profit-taking, but there is a consensus that the price will soon break and hold above this key level.

NASDAQ 4H Chart – 01/07/2024

On the 4-hour timeframe, you may notice a bullish flag forming, a positive sign for the bulls. The flag is forming between 20,000 and 19,400, so traders may need to exercise patience here as the market ranges between these levels. If the price breaks down below 19,400, this would constitute a “Change of Character” and could be a sign a deeper retracement is on the way. Until then, this remains a market controlled by the bulls. 

Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.

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