E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Momentum Has Shifted to Downside

June E-mini NASDAQ-100 Index futures are edging lower early Wednesday, following the end of the worst first quarter on record in the benchmark S&P 500 Index and the blue chip Dow Jones Industrial Average fueled by the coronavirus-driven sell-off.

Fear that an escalation of coronavirus cases would further damage the economy is behind today’s early weakness after President Donald Trump warned on Tuesday evening the U.S. should prepare for a “very, very painful two weeks” from the rampant coronavirus. White House officials are projecting between 100,000 and 240,000 virus deaths in the U.S.

At 03:38 GMT, June E-mini NASDAQ-100 Index futures are trading 7708.75, down 77.50 or -1.00%.

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside with the formation of the closing price reversal top on Tuesday.

A trade through 7995.00 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 6628.75 will change the main trend to down.

The minor trend is up. A trade through 7310.25 will change the minor trend to down. This will confirm the shift in momentum to down.

The intermediate range is 9006.75 to 6628.75. Its retracement zone at 7817.75 to 8098.50 is resistance. This zone stopped the selling at 7995.00 on Tuesday.

The short-term range is 6628.75 to 7995.00. Its retracement zone at 7261.00 to 7111.75 is the next downside target.

Short-Term Outlook

Tuesday’s closing price reversal top was confirmed early Wednesday. This could trigger the start of a 2 to 3 day correction with the next target 7261.00 to 7111.75.

On the upside, the buying is going to have to be strong enough to overcome 8098.50 to trigger the next round of aggressive short-covering.

The price action suggests that last week’s announcements of monetary and fiscal stimulus was enough to shake out a few of the weaker shorts, but not enough to bring in the powerful buying needed to trigger a breakout to the upside.