E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Taking Out 7961.00 Will Shift Momentum to Upside

June E-mini NASDAQ-100 Index futures are trading sharply lower late Monday, but off its low. The market was pressured from the start Sunday evening and even locked “limit down” several times before finally actively trading slightly after the cash market opening.

Traders are saying that the U.S. Federal Reserve’s decision to cut interest rates another 50 basis points to zero, less than two weeks after a similar cut, spooked investors into believing the economy may be in worse shape than previously anticipated.

At 19:15 GMT, June E-mini NASDAQ-100 Index futures are trading 7253.00, down 647.75 or 8.20%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend will change to up on a move through 9006.75.

On Friday, the index posted a potentially bullish closing price reversal bottom. A trade through 7961.00 will confirm the chart pattern, while shifting momentum to the upside. This could trigger the start of a 2 to 3 day counter-trend rally.

Meanwhile, a trade through 6925.25 will negate the closing price reversal chart pattern and signal a resumption of the downtrend.

Short-Term Outlook

Price levels are essentially irrelevant because the market is being driven by momentum. So the best thing to do is watch for potential shifts in momentum.

The closing price reversal bottom is a potential shift in momentum, however, we need to see a follow-through rally through 7961.00 to confirm this.

A trade through 6925.25 will indicate that the downside momentum is still in control. Taking out this level could actually trigger a late session plunge with the December 26, 2018 main bottom the next major downside target.

On the upside, a pair of downtrending Gann angles at 7604.50 and 7854.75 have been guiding the market lower since February 20 and March 3. This angles are moving down at a rate of 128 points per day.

Currently, they are acting like resistance. However, they could become trigger points for a breakout to the upside. These angles at 7604.50 and 7854.75 as well as Friday’s high at 7961.00 should all be considered resistance first, but also potential trigger point for an acceleration to the upside.