E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Despite Early Rally, Buying Not Very Impressive

Although the market is in an uptrend, this week’s chart pattern suggests traders are having a hard time following through to the upside. Even as we inched higher this week, it was all done on lower-than-normal volume.
James Hyerczyk
E-mini NASDAQ-100 Index

December E-mini NASDAQ-100 Index futures are trading slightly higher shortly before the close on Thursday after giving up most of their earlier gains.

The headlines will tell you that the market was up because of optimism over Brexit after a deal was announced and a strong performance by shares of Netflix. However, that’s not the whole story.

It’s true that prices spiked higher after a potential deal between the UK and EU was announced well before the cash market opening. It’s true that a strong earnings report supported the technology index, however, the price action looked like a computerized reaction to the news. There was not a lot of buying throughout the session, allowing the index to drift lower to nearly unchanged for the session.

This suggests buyers are being a little tentative at current price levels. Valuation could be an issue. Perhaps traders believe stocks are overpriced. Uncertainty over whether the U.K. parliament will approve the Brexit deal. The lack of clarity over the U.S.-China partial trade deal. Worries about the strength of the U.S. economy and whether the Fed will have to cut rates again at the end of the month.

These are all real concerns and they’re important enough to keep the major buyers on the sidelines. If the market is having a hard time breaking out to the upside, then perhaps investors are looking for value. If this is true then the market could be setting up for a steep break into a support or value zone.

On Thursday, December E-mini NASDAQ-100 Index futures settled at 7952.75, up 4.25 or +0.06%.

Daily December E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early in the session when buyers took out the main top at 7973.75.

The rally stalled at 7994.75, slightly below the 8002.50 main top. After hitting its high for the session, the index retreated and nearly turned lower for the period late in the day. This suggests the presence of sellers.

The short-term range is 7583.25 to 7994.75. Its retracement zone at 7789.00 to 7740.50 is the nearest downside target.

Daily Swing Chart Technical Forecast

Although the market is in an uptrend, this week’s chart pattern suggests traders are having a hard time following through to the upside. Even as we inched higher this week, it was all done on lower-than-normal volume.

At quick glance, the daily chart pattern indicates any rallies are likely to be labored with potential resistance at 8002.50 and 8071.75.

However, the daily chart also indicates the index is vulnerable to the downside with the first target the short-term 50% level at 7789.00.

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