E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – December 5, 2016 Forecast

The December E-mini NASDAQ-100 Index futures contract is trading sharply higher after recovering from an early session set-back. The earlier weakness was fueled by concerns over the Italian Referendum. Although the results of the referendum may have caused the Italian Prime Minister to resign, the markets seem to be taking the news in stride after earlier worries led to selling pressure.

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been to the downside since the main top formed at 4897.75 on November 29.

The main range is 4558.50 to 4897.75. Its retracement zone is 4721.50 to 4683.00. This zone was tested successfully on Friday and earlier today when the index made its low at 4701.50. An uptrending angle also passes through this zone at 4694.50, making it a valid downside target also.

The current price action has put the index in a position to form a potentially bullish closing price reversal bottom. The new short-term range is 4897.75 to 4701.50. Its retracement zone at 4799.75 to 4822.75 is the primary upside target. We may see a technical bounce on the first test of this zone.

Forecast

Based on the current price at 4759.00 and the earlier price action, the direction of the index today is likely to be determined by trader reaction to the steep downtrending angle at 4769.75.

Taking out 4769.75 will signal the presence of buyers. This could trigger a move into the 50% level at 4799.75. This is followed by a cluster of numbers at 4822.75, 4830.50 and 4833.75.

A failure to overcome 4769.75 will indicate the presence of sellers. This could lead to renewed selling pressure with the next target the major 50% level at 4721.50. This is followed by today’s intraday low at 4701.50, an uptrending angle at 4694.50 and the major Fibonacci level at 4683.00.

Taking out 4683.00 with conviction could lead to a steep break into the next uptrending angle at 4626.50.

Watch the price action and read the order flow at 4769.75 the rest of the session. Trader reaction to this angle will tell us if the bulls or the bears are in control today.