Nasdaq vulnerable to near-term dip as CPI hedging builds

After Trump ruled out US strikes on Iran ahead of the midterm elections, the Nasdaq has firmed up. Geopolitical risk remains elevated, though, as the standoff drags on. Over the weekend, Iran said Washington's reply to its proposal to reopen the Strait of Hormuz was not enough.

Talks aimed at resolving the differences are still continuing, and Iran's Foreign Ministry spokesperson said today that Tehran continues to review US positions and will answer through intermediaries once the review is complete. That is likely to keep any downside in crude prices limited until a breakthrough eventually materialises.

Earnings season could be more turbulent than usual, but the central focus is likely to stay on US-Iran developments and the US CPI report due Wednesday.

A core CPI print that comes in above expectations could raise the chances of a Fed rate hike in October and put pressure on the Nasdaq. A softer reading, on the other hand, is likely to provide a short-lived boost. Hedging into CPI reports has been a pattern in recent months, so the index could soften ahead of the release.

Daily timeframe – Nasdaq technical analysis

The Nasdaq recently touched a fresh all-time high but failed to follow through. A major upward trendline continues to define the bullish structure on this timeframe. In the event of a pullback, buyers are likely to defend the trendline, with a clearly defined risk beneath it, as they position for a push toward new record highs. Sellers, meanwhile, will be looking for a downside break that opens a correction toward the 28,750 area.

4-hour timeframe – Nasdaq technical analysis

1-hour timeframe – Nasdaq technical analysis

On the 1-hour timeframe, a swing low near 30,760 could act as support. Buyers are likely to step in around that level, with risk defined below it, aiming for a move above the downtrend line and a run at fresh record highs. Sellers, by contrast, will want a break lower to build bearish positions toward new lows, with the upward trendline as the target. Today's average daily range serves as the reference.

Catalysts ahead

On Wednesday, the US CPI report is due. On Thursday, the US PPI, US Retail Sales and the latest US Jobless Claims figures are due.