E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Short-Covering Rally Likely to be a Labored Event

December E-mini NASDAQ-100 Index futures are trading higher shortly after the opening. A combination of oversold conditions and reduced worries over North Korea are helping to boost the beaten up technology index.

The question that needs to be answered over the near-term is whether this renewed buying is going to lead to a new top, or just set up another selling opportunity?

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 5842.00 will signal a resumption of the downtrend. This could create enough downside momentum to challenge the August 29 main bottom at 5784.50.

The main range is 5784.50 to 6025.75. Its retracement zone is 5905.25 to 5876.50. This zone is controlling the longer-term direction of the index. The market may straddle this zone for a few days before making its next major move.

The short-term range is 6018.25 to 5842.00. If the current short-covering rally gains traction then look for the rally to extend into the short-term retracement zone at 5930.25 to 5951.00.

Daily Forecast

Based on the early price action the two support levels are the main Fibonacci level at 5876.50 and the long-term uptrending angle at 5860.50. If the angle fails to hold then look for a break into 5842.00 then possibly the next uptrending angle at 5822.50. This is the last potential support angle before the 5784.50 main bottom.

If the short-covering rally continues then look for a labored rally into a downtrending angle at 5897.75, the main 50% level at 5905.25 and a downtrending angle at 5922.25.

The rally will begin to strengthen over 5922.25 with potential targets at 5930.25 and 5951.00.