E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Testing Major 50% Level, Watch for Closing Price Reversal Bottom

March E-mini NASDAQ-100 Index futures are trading lower during the pre-market session. The range is tight but volume appears to be a little above average. The index is currently testing a major long-term retracement zone while investors continue to digest the impact of the government shutdown while trying to determine the meaning of Treasury Secretary Mnuchin’s phone call to the big banks over the week-end.

At 0157 GMT, March E-mini NASDAQ-100 Index futures are trading 5881.75, down 10.25 or -0.16%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier in the session when sellers took out Monday’s low. The main top is at 6897.00, which means the market is in no position to change the main trend to up today.

However, due to the prolonged move down in terms of price and time, today’s session begins with the index inside the window of time for a potentially bullish closing price reversal bottom. This chart pattern won’t change the main trend to up, but it could trigger the start of a 2 to 3 day counter-trend rally.

Daily Retracement Levels Technical Analysis

The major retracement zone is 5866.50 to 5421.00. This zone is currently being tested. If a reversal bottom is going to form then it is likely to do so inside this zone.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the March E-mini NASDAQ-100 Index on Wednesday is likely to be determined by trader reaction to the 50% level at 5866.50.

Bullish Scenario

A sustained move over 5866.50 will indicate the presence of buyers. If this move can generate enough upside momentum then look for a potential rally into at least 6358.75.

Bearish Scenario

A sustained move under 5866.50 will signal the presence of sellers. This could trigger an acceleration to the downside with the first target the July 5, 2017 main bottom at 5688.50 and the May 18, 2017 main bottom at 5686.50.

If 5686.50 is taken out with conviction then look for the selling to extend into a series of levels at 5483.50, 5450.75 and 5421.00.

Closing Price Reversal Bottom

Given the prolonged move down in terms of price and time and today’s lower-low, overtaking and sustaining a rally over Monday’s close at 5892.00 will put the index in a position to post a potentially bullish closing price reversal bottom.

This could trigger a strong intraday short-covering rally. A higher close and a confirmation on Thursday could trigger the start of a 2 to 3 day counter-trend rally.