Based on the early price action, the direction of the December E-mini NASDAQ-100 Index is likely to be determined by trader reaction to the 50% level at 7154.75.
The major technology index is trading at its highest level since October 24 on Wednesday as investors continue to respond to the outcome of the mid-term elections which resulted in a split Congress. Today’s move is more of a relief rally since the outcome of the election lifted some of the uncertainty that had clouded the markets for over a month.
At 1635 GMT, December E-mini NASDAQ-100 Index futures are trading 7148.50, up 132.00 or +1.88%.
The main trend is up according to the daily swing chart. The trend turned up earlier today when buyers took out the last swing top at 7143.25. The new swing bottom is 6865.00. A trade through this level will change the main trend to down.
The main range is 7728.75 to 6580.50. The index is currently testing its retracement zone at 7154.75 to 7290.25. This zone is controlling the longer-term direction of the index.
The minor range is 7368.50 to 6580.50. Its retracement zone at 7067.50 to 6974.50 is new support.
The major support zone is 6822.75 to 6609.00. It provided support on October 29 when the index bottomed at 6580.50.
Based on the early price action, the direction of the December E-mini NASDAQ-100 Index is likely to be determined by trader reaction to the 50% level at 7154.75.
Taking out 7154.75 and sustaining the move will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible rally into the Fibonacci level at 7290.25.
Overtaking 7290.25 will indicate the buying is getting stronger. This could fuel a move into the next main top at 7368.50. This is a potential trigger point for an acceleration to the upside. The daily chart shows no resistance until 7728.75.
A sustained move under 7154.50 will signal the return of sellers. This could trigger a break into 7067.50, followed by 6974.50. This is the last support before the 6865.00 main bottom.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.