E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Reversal Top Could Trigger 2-3 Day Correction

March E-mini NASDAQ-100 Index futures are trading lower shortly before the cash market close. After reaching a record high earlier in the session, the buying dried up and the market turned lower for the session, putting it in a position to post a potentially bearish closing price reversal top.

A closing price reversal top is not a change in trend, but a shift in momentum. It is often fueled by profit-taking after a prolonged move up in terms of price and time. It’s also a signal that the selling is greater-than-the-buying at current price levels.

If the chart pattern is confirmed then look for the start of a 2 to 3 day correction, or a 50% to 61.8% retracement of the last rally.

At 20:57 GMT, March E-mini NASDAQ-100 Index futures are trading 9047.50, down 40.75 or -0.45%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 9114.75 will signal a resumption of the uptrend. The main trend will change to down on a move through 8678.00.

The short-term range is 8678.00 to 9114.75. Its retracement zone at 8896.25 to 8844.75 is the first downside target zone.

Short-Term Outlook

The direction of the March E-mini NASDAQ-100 Index into the close on Tuesday is likely to be determined by trader reaction to yesterday’s close at 9085.25.

A close over 9085.25 will indicate there are still buyers in the market.

A close under 9085.25 will form a closing price reversal top. If confirmed on Wednesday, we could see a steep acceleration into at least 8898.25 over the near-term.

Short-Term Notes

Once again, the index straddled a steep uptrending Gann angle at 9085.25. This angle, moving up at a rate of 32 points per day from the 8189.25 bottom, has been guiding the market higher since December 3.

A sustained move over this angle will put the index in a bullish position. A close under this angle coupled with the closing price reversal top could fuel the start of a meaningful break.