E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Sellers Looking at 15567.25 – 15284.00 and Beyond

March E-mini NASDAQ-100 Index futures are trading sharply lower late in the session on Wednesday as investors digested the minutes of the Federal Reserve’s most recent meeting. And the early reaction was bearish after the minutes revealed policymakers were preparing for balance sheet reduction shortly after it raises rates later this year.

At 20:10 GMT, March E-mini NASDAQ-100 Index futures are trading 15834.50, down 441.25 or -2.71%. The Invesco QQQ Trust Series 1 ETF (QQQ) is at $386.40, down $10.07 or -2.54%.

“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the meeting summary stated.

Since the Fed’s mid-December meeting, investors have chuckled at the Fed’s decision to accelerate tapering and the possibly of three rate hikes in 2022. However, reducing the balance sheet is a game-changer for investors.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 15815.00 will signal a resumption of the downtrend. A move through 16564.00 will change the main trend to up.

The index is also trading on the weak side of a pair of retracement zones at 15938.00 to 16075.75 and 16130.00 to 16280.50, making them resistance.

The next major downside target area and possible support is the retracement zone at 15567.25 to 15284.00.

Short-Term Outlook

The Fed’s plan to reduce its balance sheet is bearish news for stock market investors. It means that not only will the central bank reduce stimulus and raise rates, but when it’s done with that, it will begin to sell Treasurys. That in a nutshell is the reduction of a balance sheet. We all know that when Treasury bonds are sold, prices go down and interest rates go up.

If the downside momentum continues then look for a near-term test of at least 15567.25 to 15284.00.