E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Approaching Key Retracement Zone at 5905.00 to 5876.50
December E-mini NASDAQ-100 Index futures closed lower on Friday with Apple shares continuing to be the biggest drag on the primary tech-based index. The iPhone maker had its worst week since April 2016, dropping more than 5.5 percent since Monday.
Stocks were also pressured by a geopolitical event. Before the opening, South Korea reported that North Korea may be planning a hydrogen-bomb test in the Pacific Ocean.
Technically, the main trend is down according to the daily swing chart. The trend turned down earlier in the week when the index crossed to the weak side of a swing bottom at 5948.00.
The trade through 5948.00 also confirmed the double-top at 6018.25 and 6025.75.
The main range is 5784.50 to 6025.75. Its retracement zone at 5905.00 to 5876.50 is the primary downside target. We could see a technical bounce on the first test of this zone. If it fails to attract buyers then momentum is going to make a serious downward shift.
Over the next several days, the direction of the index is going to be determined by trader reaction to the retracement zone so watch the price action and read the order flow on a test of this zone. This will tell us if the selling pressure is increasing or if buyers are re-emerging to support the market.
At this point we have to determine if the weakness is being caused by broad-based selling of technical stocks, or if the drop in Apple shares is controlling the price action.