E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – October 21, 2016 Forecast

December E-mini NASDAQ-100 Index futures are trading lower during the pre-market session. Unlike the E-mini S&P 500 Index and the E-mini Dow Jones Industrial Average, the NASDAQ-100 Index faces little exposure to oil prices, so it managed to finish higher yesterday. However, like the other indices it is still struggling to regain the uptrend because of concerns over Fed policy, the direction of interest rates, earnings, rising Treasury yields and to some extent, the presidential election.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through 4901.50 will turn the main trend to up. A move through 4754.50 will signal a resumption of the downtrend. Momentum is up and could get stronger, depending on how traders react to the intermediate retracement zone.

The main range is 4625.25 to 4901.50. Its retracement zone at 4763.25 to 4730.75 provided support last week when the index reached a bottom at 4754.50 on October 13.

The intermediate range is 4901.50 to 4754.50. Its retracement zone at 4828.00 to 4845.50 is currently acting like resistance. Trader reaction to this zone will likely determine the near-term direction of the index. Sellers are trying to form a potentially bearish secondary lower top inside this zone. Buyers are trying to take it out in an effort to make 4754.50 an important bottom.

The short-term range is 4754.50 to 4856.75. Its 50% level or pivot at 4805.50 is support. Breaking this level will be a sign of weakness and will change momentum to down.

Forecast

Based on the current price at 4836.75 (0937 GMT) and the earlier price action, the direction of the index today is likely to be determined by trader reaction to the intermediate Fibonacci level at 4845.50.

A sustained move under 4845.50 will indicate the presence of sellers. The first target is a price cluster at 4829.50 to 4828.00. This is also the trigger point for a steep sell-off into the next downside targets at 4805.50 and 4802.50.

Taking out 4802.50 with conviction could lead to a test of the next uptrending angle at 4778.50.

A sustained move over 4845.50 will signal the presence of buyers. Overtaking the angle at 4850.50 will indicate the buying is getting stronger. This could lead to a test of a downtrending angle at 4865.50.

The angle at 4865.50 is the trigger point for a surge into 4883.50. This is the last potential resistance angle before the 4901.50 main top.

Watch the price action and read the order flow at 4845.50. Trader reaction to this Fib level will tell us if the buying is getting stronger, or if sellers are regaining control.