E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Reversal Tops Indicating Top Heavy MarketThe main trend is up, but momentum is trending lower with the formation of the closing price reversal top on Thursday and its confirmation on Friday.
June E-mini NASDAQ-100 Index futures settled higher on Friday after clawing back all of its earlier losses. Volume was extremely low as most major players took off early ahead of the long U.S. holiday. For the week, the cash market NASDAQ Composite rose more than 3%.
The NASDAQ Composite Index is down about 5% from its February 19 record high, helped in recent weeks by gains in Microsoft, Amazon, Facebook and other heavyweight companies seen coming out of the economic downturn stronger than their smaller rivals.
At Friday’s close, June E-mini NASDAQ-100 index futures were trading 9421.50, up 65.75 or +0.70%.
Prices were lower early in the session on Friday as investors gauged China-U.S. tensions and amid ongoing uncertainty about the pace of economic recovery from the coronavirus.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, but momentum is trending lower with the formation of the closing price reversal top on Thursday and its subsequent confirmation earlier on Friday.
A trade through 9510.75 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 8847.00.
The minor trend is down. This is also a sign of a shift in momentum.
The minor range is 8847.00 to 9510.75. Its 50% level at 9178.75 is the next downside target.
The short-term range is 8556.25 to 9510.75. Its retracement zone at 9033.25 to 8920.75 is the second downside target.
Last week there were two closing price reversal tops formed on the daily chart. One was negated, the other is still intact. The chart pattern isn’t indicating a change in trend, but it does suggest that the selling is greater than the buying at current price levels. This could lead to a two to three day counter-trend correction.