- Nasdaq futures rebound at 21340, indicating new opportunities on the horizon.
- Varied momentum indicators highlight the importance of observing price movements in Europe and the US.
Resilience of Nasdaq Amidst Market Turbulence
Following the Fed's recent rate decisions, Nasdaq futures experienced a significant downturn. Despite this, it's encouraging to see the index maintain crucial technical support at 21340.75 during the market's volatility.
While it's premature to declare a market bottom due to the mixed signals from momentum indicators—like a bearish MACD crossover—it's crucial to note that the RSI (14) remains in a bullish uptrend. Therefore, rather than speculate on thin trading volumes in Asian markets, it's wiser to wait and assess how price action unfolds in the forthcoming European and US trading sessions.
Source: TradingView
If the price successfully retests and holds above 21340, traders could consider entry points above this level, implementing stops for risk management. Beyond a minor resistance level at 21608, there appears to be little resistance until reaching previous record highs.
Another favorable scenario arises if the price breaks above and stays at 21608, allowing for potential long positions with appropriate stop-loss orders. On the other hand, if the price falls below 21340 without regaining strength, it may be prudent to consider a short position beneath this level while maintaining protective stops. Nearby support levels include the 50-day moving average at 20984, with a break below potentially leading to a sharper decline towards 20400.
Analysis of Fed's Impact on Market Sentiment
Overall, the volatility triggered by the Fed was not due to dramatically altered projections from their latest updates, which closely aligned with traders' expectations prior to the announcement. Analyzing market outlooks, it's evident that traders anticipate a funds rate plateau roughly 70 basis points higher than the Fed’s projected dot plot, indicative of a comparatively dovish stance from the Fed.
The message from the Fed suggests a more gradual pace for rate cuts rather than drastic changes. With one anticipated 25bps adjustment being removed from the forward guidance by the end of 2027, the market reaction suggests a more significant shift than what actually occurred.
This raises questions regarding the sustainability of the current market downtrend as perceptions stabilize against the Fed’s more tempered approach.
