E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Momentum Turns Lower on Closing Price Reversal Top Confirmation

March E-mini NASDAQ-100 Index futures retreated from record highs on Monday as investors booked profits on the penultimate day of the decade after optimism over improving U.S.-China trade relations vaulted the index to several record highs since mid-month.

In the cash market, the NASDAQ Composite fell for the second straight session, after having snapped an 11 session winning streak on Friday.

At 21:55 GMT, March E-mini NASDAQ-100 Index futures are trading 8732.75, down 50.50 or -0.58%.

Tech stocks largely led the drop in the S&P 500, with Microsoft Corp. weighing on the sector. Information technology stocks were the best performing among the 11 S&P 500 subsectors this year.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the confirmation of the closing price reversal top from Friday. This could trigger the start of a 2 to 3 day break or a 50% correction of the last rally.

The main trend will change to down on a trade through 8189.25 so we can conclude it’s safe for now. A trade through 8843.50 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is down. It turned down on Monday when sellers took out the last minor bottom at 8707.00, shifting momentum to the downside.

The minor range is 8319.50 to 8843.50. Its 50% level or pivot comes in at 8581.50. Watch for a technical bounce on the first test of this level.

The main range is 8189.25 to 8843.50. Its retracement zone at 8516.25 to 8439.00 is a value zone. A test of this zone is likely to attract the most buying attention.

Short-Term Outlook

After confirming the closing price reversal top on the trade through Friday’s low at 8769.00, the downside momentum was strong enough to take out an uptrending Gann angle at 8765.25 and a minor bottom at 8707.00.

Breaking the uptrending Gann angle was significant because it had been guiding the index higher since December 3. The close under this angle could lead to further selling pressure on Tuesday. If this move creates enough downside momentum then look for the selling to possibly extend into the minor 50% level at 8581.50.