E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Amazon Guidance Helps Form Closing Price Reversal Top

Technology shares finished with a mixed picture on Thursday with the cash market NASDAQ Composite posting a 0.22% gain and the June E-mini NASDAQ-100 Index settling 0.66% lower as after-market earnings report encouraged investors to sell into the extended futures close.

Traders are blaming Amazon for the divergence between the cash and futures markets. Amazon reported a huge beat on profits and matched estimates for revenue in its first-quarter earnings results. However, concerns over slowing revenue growth held the stock unchanged in after-hours trading as second-quarter operating profit guidance came below street estimates.

On Thursday, the June E-mini NASDAQ-100 Index settled at 7796.25, down 51.50 or -0.66%. Earlier in the session, the market reached an all-time high at 7879.50.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, Thursday’s potentially bearish closing price reversal top suggests that momentum may be getting ready to shift to the downside. A trade through 7792.00 will confirm the closing price reversal top and signal the shift in momentum to the downside.

The minor trend is also up. A trade through 7660.25 will change the minor trend to down. This will confirm the shift in momentum.

The minor range is 7660.25 to 7879.50. Its retracement zone at 7769.75 to 7744.00 is the first downside target. We could see a technical bounce on the initial test of this area. If it fails then look for the selling to possibly extend into the next minor bottom at 7660.25.

The main range is 7276.00 to 7879.50. Its retracement zone at 7577.75 to 7506.50 is a value zone and likely to attract big buyers.

Daily Swing Chart Technical Forecast

Based on Thursday’s closing price reversal top chart pattern and the close at 7796.25, the direction of the June E-mini NASDAQ-100 Index on Friday is likely to be determined by trader reaction to yesterday’s low at 7792.00.

Bullish Scenario

A sustained move over 7792.00 will indicate the presence of buyers. They will be defending the market against a confirmation of a closing price reversal top. If this move is able to generate enough upside momentum then buyers may make a run at 7879.50. Taking out this level will negate the closing price reversal top and signal a resumption of the uptrend.

Bearish Scenario

Taking out 7792.00 will confirm the closing price reversal top. A sustained move under this level will indicate the selling is getting stronger. This could trigger a break into a minor 50% level at 7769.75, followed by a minor Fibonacci level at 7744.00.

If 7744.00 fails then look for the selling to possibly extend into the next minor bottom at 7660.25. This is followed by another minor bottom at 7598.75 and the main 50% level at 7577.75.

Closing price reversal tops tend to lead to 2 to 3 day corrections.