E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Reaction to 14920.50 Fib Level Sets Tone into Close

December E-mini NASDAQ-100 Index futures are down sharply late in the session on Tuesday. The technology-weighted index is poised to post its worst performance in four months amid a surge in U.S. Treasury yields.

At 18:03 GMT, December E-mini NASDAQ-100 Index futures are trading 14769.00, down 425.75 or -2.80%.

Progress on U.S. government funding negotiations was also in focus with Democrats scrambling to prevent a government shutdown and a potentially economically crippling U.S. credit default on Tuesday while also trying to agree on a mammoth tax and spending package.

Treasury yields surged as investors priced in higher inflation in 2021, as well as an eventual interest rate hike by the Federal Reserve next year.

In stock related news, shares of Apple, Microsoft Corp, Amazon.com Inc and Google-parent Alphabet Inc dropped between 2.9% and 4%. These stocks have benefited from the low-interest rate environment since the start of the pandemic.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Tuesday when sellers took out the main bottom at 14807.50. A trade through 15399.25 will change the main trend to up.

The short-term range is 14437.00 to 15702.25. The index is currently trading on the weak side of its retracement zone at 14920.50 to 15069.75, making it resistance.

The main range is 12915.00 to 15702.25. If the selling pressure continues and a pair of main bottoms at 14699.00 and 14437.00 fail as support then its retracement zone at 14308.50 to 13979.75 will become the primary downside target. Look for buyers on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the December E-mini NASDAQ-100 Index into the close on Tuesday is likely to be determined by trader reaction to 14920.50.

Bearish Scenario

A sustained move under 14920.50 will indicate the presence of sellers. Taking out the intraday low at 14740.75 will indicate the selling pressure is getting stronger. This could trigger a further decline into the main bottom at 14699.00.

The main bottom at 14699.00 is a potential trigger point for an acceleration into the next main bottom at 14437.00. This is the last potential support before the 14308.50 to 13979.75 retracement zone.

Bullish Scenario

A sustained move over 14920.50 will signal the presence of buyers. If this creates enough upside momentum then look for a late-session short-covering rally into 15069.75.

Side Notes:  The retracement zone at 14308.50 to 13979.75 is a value area so look for new buyers to show up on a test of this zone. This could trigger the start of a powerful short-covering rally.