E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Early Strength Could Challenge 12789.75 Record High

March E-mini NASDAQ-100 Index futures are trading higher shortly after the pre-market opening as investors seem to be ignoring worries over a resurgent coronavirus pandemic and upcoming U.S. Senate runoffs in Georgia. Investors also seem to be shrugging off concerns over a government shutdown after President Donald Trump failed to sign the recent stimulus package passed by Congress last Monday.

At 23:39 GMT, March E-mini NASDAQ-100 Index futures are trading 12742.00, up 37.50 or +0.30%.

The early strength is raising hopes for a so-called “Santa Claus Rally”, a phenomenon whereby stocks have tended to perform well in the last five trading days of December, and the first two of January. The event has lifted equities in 55 out of 74 years since 1945, according to CFRA Research. This year, the period started on December 24.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum has been trending lower since the formation of a closing price reversal top on December 18 and its subsequent confirmation on December 21.

A trade through 12789.75 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 12217.00.

The minor trend is up, but a move through last week’s low at 12461.00 will indicate the selling pressure is getting stronger.

The minor range is 12789.75 to 12461.00. Its 50% level or pivot at 12625.25 is support, having held the past four sessions.

The short-term range is 12217.00 to 12789.75. Its retracement zone at 12503.25 to 12435.75 is also support. This zone stopped the selling on December 21 at 12461.00.

Early Outlook

The early price action suggests Monday will be a “risk on” session as long as 12625.25 holds as support.

Bullish Scenario

A sustained move over 12625.25 will indicate the presence of buyers. This could create the upside momentum needed to challenge the record high at 12789.75, setting up the possibility of a breakout to the upside.

Bearish Scenario

A sustained move under 12625.25 will signal the presence of sellers. This could trigger a break into the short-term retracement zone at 12503.25 to 12435.75, along with last week’s low at 12461.00.

Look for the start of an acceleration to the downside if 12435.75 fails as support.

Side Notes

Although there is an early bias to the upside, volume is expected to be extremely low, which raises the possibility of exaggerated volatility. Be careful buying strength or selling weakness because of the possibility of a whipsaw trade.

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