E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Reaction to 10708.50 – 10791.25 Sets the Tone

September E-mini NASDAQ-100 Index futures are barely holding on to gains on Wednesday after an early rally failed to attract enough buyers to sustain the move. The price action suggests that investors who bought stocks that would benefit from another shutdown of the economy due to the coronavirus pandemic are booking profits.

At 20:25 GMT, September E-mini NASDAQ-100 Index futures are trading 10684.50, up 38.25 or +0.36%. This is down from a high of 10766.50.

Investors showed a limited reaction to the news that Moderna, Inc reported a small-scale study showed its experimental COVID-19 vaccine produced high levels of virus-killing antibodies.

Gains for the NASDAQ were capped by online retail giant Amazon.com Inc, video streaming platform Netflix Inc and Microsoft Corp which slipped after surging to record highs recently.

Apple shares rose after the communications giant won a landmark court case Wednesday against the European Commission over a dispute concerning 13 billion Euros ($14.9 billion) in Irish taxes.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside following Tuesday’s closing price reversal top and today’s subsequent confirmation of the potentially bearish chart pattern.

A trade through 11058.50 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 9728.75.

The minor trend is also up. A trade through 10358.75 will change the minor trend to down. This will confirm the shift in momentum to down.

The minor range is 11058.50 to 10358.75. Its retracement zone at 10708.75 to 10791.25 is potential resistance. It stopped the rally on Wednesday at 10766.50.

The short-term range is 9728.75 to 11058.50. Its 50% level at 10393.50 is support. This level stopped the selling on Tuesday.

The second short-term range is 9368.25 to 11058.50. Its retracement zone at 10213.25 to 10014.00 is the next potential downside target.

Short-Term Outlook

Wednesday’s price action was significant because it indicated that counter-trend sellers were coming in on the test of 10708.75 to 10791.25. They are trying to produce a potentially bearish secondary lower top that could eventually lead to a change in the trend.

Traders should continue to watch the price action and read the order flow on a test of 10708.75 to 10791.25. This will tell us if the buying is strong enough to resume the rally, or if the market is setting up for a short-term pullback.