E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Two-Day Correction Will Signal the Presence of Sellers
Rising tech stocks helped drive the March E-mini NASDAQ Composite futures contract sharply higher on Friday. Impressive quarterly earnings and solid economic growth also contributed to the bullish price action.
March E-mini NASDAQ-100 Index futures settled at 7030.25, up 98.75 or 1.42%. The index notched a new record high while posting its biggest one-day gain since March 1, 2017.
In other news, the Commerce Department said the U.S. economy grew by 2.6 percent during the fourth quarter of 2017. Economists were looking for a gain of 3 percent. The Commerce Department also said U.S. Durable Goods Orders rose 2.9 percent in December. Economists had forecast an increase of 0.8 percent.
Daily Swing Chart Analysis
The main trend is up according to the daily swing chart. The uptrend resumed on Friday, when buyers took out the closing price reversal top at 7004.25.
The prolonged move up in terms of price and time has put the index in a position to form a closing price reversal top. Since there is no resistance, this chart pattern will be the best indication that a temporary top has been reached.
The buying has been so strong that the index has not made two consecutive lower-lows since December 26 to December 29.
The new minor bottom is 6888.25. A trade through this level will change the minor trend to down. The next minor bottom is 6628.25. This is a possible trigger point for a possible acceleration to the downside with the main bottom at 6383.25 the next main bottom.
The main range is 6383.25 to 7034.50. Its retracement zone at 6708.75 to 6632.00 will be the primary downside target of any correction.
Daily Swing Chart Forecast
Based on Friday’s strong close and the strong upside momentum into the close, the direction of the index according to the daily swing chart is likely to be determined by trader reaction to 7034.50.
Taking out 7034.50 will signal a resumption of the uptrend. This will be a bullish move.
Taking out 7034.50 then moving below Friday’s close at 7030.25 will be the first sign of weakness.
Taking out 7034.50 then closing below 7030.25 will form a potentially bearish closing price reversal top. This could lead to the start of a 2 to 3 day correction, or a 50% correction of the last rally.
Early selling pressure will start to intensify if the index crosses to the weak side of the short-term pivot at 6961.25. This could lead to a test of the next minor bottom at 6888.25 then the next minor pivot at 6831.25.
This article was originally posted on FX Empire