E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Setting Up for Short-Term Pullback?

June E-mini NASDAQ-100 Index futures are trading lower shortly after the cash market index after touching a record high for a second consecutive session. We’re not seeing anything in the news that could’ve triggered the sell-off, but the move isn’t necessarily a major surprise either since markets tend to drift ahead of important U.S. Federal Reserve announcements.

At 13:56 GMT, June E-mini NASDAQ-100 Index futures are trading 9780.25, down 28.25 or -0.29%. This is down from a high at 9875.50.

Although the Federal Reserve is widely expected to leave interest rates unchanged and to reiterate its commitment to unlimited asset purchases to keep markets functioning, policymakers may mention the V-Shaped recovery in the stock market. They could refrain from commenting on the stock market rally. They could say they are concerned over excessive speculation, or they could offer their own predictions for the economic recovery which may not look at all like a V-Shape.

The big problem for the Fed is that it has to tread lightly. It doesn’t want to say anything that could kill the rally or trigger a volatile correction, but it also doesn’t want to give investors the false impression that the economic recovery is just around the corner.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out Friday’s high. The main trend will change to down on a trade through 8847.00. This is highly unlikely, however, but there is room for a near-term correction into a series of retracement levels.

Due to the prolonged rally in terms of price and time, the market is also in a position to post a potentially bearish closing price reversal top. If confirmed, this could lead to the start of a 2 to 3 day correction, but not necessarily a change in trend.

The minor range is 9172.50 to 9875.50. Its 50% level at 9524.00 is the first potential downside target.

The main range is 8847.00 to 9875.50. Its retracement zone at 9361.25 to 9239.75 is the primary downside target zone.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the June E-mini NASDAQ-100 Index the rest of the session on Monday is likely to be determined by trader reaction to Friday’s close at 9808.50.

Bearish Scenario

A sustained move under 9808.50 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the 50% level at 9524.00.

Watch for a technical bounce on the first test of 9524.00. If it fails then look for the selling to possibly extend into the short-term 50% level at 9361.25.

Bullish Scenario

A sustained move over 9808.50 will signal the presence of buyers. This could lead to a retest of the intraday high at 9875.00. Taking out this level will signal a resumption of the uptrend.