E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – May 4, 2016 Forecast

June E-mini NASDAQ-100 Index futures are trading lower shortly before the cash market opening. The market is getting closer to last week’s low at 4296.75. Taking out this level will signal a resumption of the downtrend.

The main trend is down according to the daily swing chart. The trend won’t turn up until 4584.50, however, the index is in the window of time for a closing price reversal bottom. This won’t change the trend to up either, but it could lead to a 2 to 3 day correction.

The main range is 3867.75 to 4584.50. Its retracement zone at 4226.00 to 4151.50 is the primary downside target. If there is going to be a closing price reversal bottom, then it is likely to occur inside this zone.

If 4296.75 is not taken out then a short-term range will form between 4584.50 and 4296.75. In this case, we could see a rebound into its retracement zone at 4440.75 to 4474.50 over the near-term.

Based on the current price at 4304.50, the direction of the market into the close is likely to be determined by trader reaction to 4296.75.

Taking out 4296.75 with conviction could fuel an acceleration to the downside into the main 50% level at 4226.00. This is followed by swing bottoms at 4220.25 and 4171.75. The Fibonacci level at 4141.50 is the last major support.

The inability to take out 4296.75 or a sustained move above it will signal the presence of buyers. This could create enough upside momentum to eventually lead to a short-covering rally into the 4440.75 to 4474.50 retracement zone.

Watch the price action and read the order flow at 4296.75 today. Trader reaction to this level should determine whether we sell-off hard into 4226.00 or start a short-covering rally back to 4440.75.