E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Break in Yields Should Fuel Short-Covering Rally

March E-mini NASDAQ-100 Index futures are trading lower as we approach the cash market opening. The tech-weighted index is clawing back some of its earlier losses after sinking more than 2% on Monday early in the pre-market session.

Stock traders showed little positive reaction early to the passage of a $1.9 trillion COVID-19 relief package by the U.S. Senate on Saturday. Instead, that news lifted bond yields which weighed on demand for higher risk assets especially technology stocks.

At 14:06 GMT, March E-mini NASDAQ-100 Index futures are trading 12603.00, down 60.75 or -0.48%.

Despite the early setback, we’re looking for a turnaround today. The sell-off in the bonds was orderly and it didn’t do significant damage to the chart pattern. Yields are hovering at levels seen last week and the NASDAQ-100 is trading near its high of the pre-market session.

We could be wrong, but if yields start to come off their highs pretty hard then tech stocks should soar. Look for intraday set ups on the E-mini NASDAQ-100 charts and use the June 10-year Treasury note as your trigger. Don’t just guess.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but momentum shifted to the upside earlier today when buyers confirmed Friday’s potentially bullish closing price reversal bottom.

The main trend will change to up on a trade through 13328.25. A move through 12207.25 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main support is the retracement zone at 10936.25 to 13900.50. This area stopped the selling on Friday at 12207.25.

The first minor range is 13328.25 to 12207.25. Its retracement zone at 12767.75 to 12900.00 is resistance.

The second minor range is 13900.50 to 12207.25. Its retracement zone at 13054.00 to 13253.75 is the second resistance zone target.

Also watch the volume and order flow on a test of 12885.50. This is the December 31, 2020 close. Overtaking it will put the index higher for the year.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the index into the close will be determined by trader reaction to 12767.75.

Bullish Scenario

A sustained move over 12767.75 will indicate the presence of buyers. This could trigger a quick move into 12885.50 to 12900.00.

Overtaking 12900.00 could trigger an acceleration into the second minor retracement zone at 13054.00 to 13254.00.

Bearish Scenario

A sustained move under 12767.75 will signal the presence of sellers. This could lead to a steep intraday break into 12418.25, followed by 12207.25 and 12068.50.

For a look at all of today’s economic events, check out our economic calendar.