E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – May 3, 2016 Forecast

June E-mini NASDAQ-100 Index futures are called lower based on the pre-market trade. Sellers hit the market after the release of weaker-than-expected Chinese manufacturing data. The weaker U.S. Dollar as well as the stronger Japanese Yen and Euro are also contributing to the weakness.

The main trend is down according the daily swing chart. Today is the tenth day down from the most recent swing top, putting the market in the window of time for a short-covering rally. The best signal would be a closing price reversal bottom.

The market is currently trading inside a retracement zone bounded by 4378.25 and 4329.50. Trader reaction to this zone will likely determine the short-term direction of the market.

The short-term range is 4584.50 to 4296.75. Its retracement zone at 4440.75 to 4474.50 is the primary upside target.

Based on the current price at 4335.25, the direction of the market today is likely to be determined by trader reaction to the Fibonacci level at 4329.50.

A sustained move over 4329.50 will indicate the presence of buyers. This could create enough upside momentum to challenge the Fib level at 4378.25. This is a potential trigger point for an acceleration into 4424.50.

The rally will strengthen over 4424.50 with potential targets coming in at 4440.75, 4474.50 and 4315.50.

A sustained move under 4329.50 will signal the presence of sellers. This could lead to a fast break into a long-term uptrending angle at 4315.50 and last week’s low at 4296.75.

The daily chart indicates there is plenty of room to the downside under 4296.75 with the next major target coming in at 4226.00.

Watch the price action and read the order flow at 4329.50. Trader reaction to this level will tell us if the buyers or sellers are in control. Also don’t be surprised by a short-covering rally or a potentially bullish closing price reversal bottom. Make sure you have protection in place if you are short since the index is ripe for a short-covering rally.