E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Daily Tone Strengthens Over 7067.50, Weakens Under 6874.50

December E-mini S&P 500 Index futures posted a strong gain on Wednesday as investors tried to recapture the huge losses for the month on the last day of trading in October. The two-day counter-trend rally has been impressive, but the index has a long way to go before the main trend changes to up.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The two-day rally has helped form a new main bottom at 6580.50. A trade through this level will signal a resumption of the downtrend. The main trend will change to up on a move through 7368.50.

The minor trend is up. The trend turned up on Wednesday when buyers took out the minor top at 6991.50. This also shifted momentum to the upside. The next target is the next minor top at 7175.00.

The major support is a retracement zone at 6822.75 to 6609.00. This area essentially provided support when the market traded down to 6580.50 on Monday.

The short-term range is 7368.50 to 6580.50. Its retracement zone at 6974.50 to 7067.50 is the first upside target. This zone was tested on Wednesday and provided some resistance.

The main range is 7728.75 to 6580.50. If the rally continues then its retracement zone at 7154.75 to 7290.25 will become the next upside target zone.

Since the main trend is down, we have to assume that sellers will continue to come in on tests of the retracement zones until the trend changes to up.

Daily Swing Chart Technical Forecast

Based on Wednesday’s price action, the direction of the December E-mini NASDAQ-100 Index on Thursday is likely to be determined by trader reaction to the short-term 50% level at 6974.50.

A sustained move over 6974.50 will indicate the presence of buyers. This could drive the index into the short-term Fib level at 7067.50. Taking out this level will put the index in a position to challenge the main retracement zone at 7154.75 to 7290.25. Watch for sellers on the first test of this area.

A sustained move under 6974.50 will signal the presence of sellers. This will be the first sign that a secondary lower top is forming. If this move generates enough downside momentum then look for a potential pullback into the major 50% level at 6822.75.

The 50% level at 6822.75 has to hold as support or the market could break all the way down to 6809.00 to 6580.50.