E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Bullish Over 6398.00, Bearish Under 6363.00

March E-mini NASDAQ-100 Index futures plunged on Friday. After two days of consolidation, sellers hit the market shortly before the close, sending the index to its lowest level since December 13. Profit-taking ahead of the new year may have been the motivation for the move. The size and speed of the break may have been the result of extremely low volume.

The index settled at 6408.75, down 37.50 or -0.58%.

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on December 19.

A trade through 6545.75 will negate the chart pattern and signal a resumption of the uptrend.

A sustained move through a key retracement zone will extend the sell-off, however, the trend won’t officially change to down unless the 6250.00 main bottom is taken out.

The main range is 6250.00 to 6245.75. Its retracement zone is 6398.00 to 6363.00. This zone was also the primary downside target of the closing price reversal top. This zone was tested on Friday when the index traded down to 6383.25. The technical bounce following a test of this level was enough to drive the index back over it and to 6408.75.

If the short-term range of 6545.75 to 6383.25 holds then we could see a technical bounce back to 6464.50 to 6483.75 over the near-term.

Based on Friday’s price action, traders will be facing two choices when trading resumes on Tuesday. Sellers are going to retake control and attempt to drive the index through 6363.00, or buyers are going to return and attempt to drive the index back to 6464.50 to 6484.00.

Trader reaction to a rally back to 6464.50 to 6483.75 will be very critical to the structure of the market. If sellers stop the move then a secondary lower top will form and this could be the first sign that investors are getting ready to turn the main trend to down.