E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Vertical Rise Means Index is Close to Overbought

September E-mini NASDAQ-100 Index futures hit a record high on Tuesday after a full approval of a COVID-19 vaccine raised hopes of a quicker economic recovery. Earlier in the month, the index was pressured on concerns about a slowing economic recovery from the surge in coronavirus infections.

At 20:30 GMT, September E-mini NASDAQ-100 Index futures are trading 15359.00, up 54.50 or +0.36%.

Hopes that the Federal Reserve will maintain its ultra-loose monetary policy stance is also driving the bullish price action. Investors will be closely watching Chairman Jerome Powell’s speech at the Fed’s annual Jackson Hole symposium on Friday for clues on the central bank’s policy-tightening timeline.

In stock related news, megacap growth names Apple Inc, Amazon.com and Google-owner Alphabet Inc rose 0.7% each. Meanwhile, a rally in U.S.-listed Chinese technology stocks also boosted the NASDAQ, with Pinduoduo Inc surging 17% after the e-commerce platform reported its first ever quarterly profit.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 15337.50 early in the session reaffirmed the uptrend. A move through the intraday high at 15384.00 will signal a resumption of the uptrend early Wednesday.

A trade through 14710.50 will change the main trend to down. This is not likely, but there is room to the downside for a normal 50% to 61.8% correction into 15047.25 to 14967.75. This is followed by another 50% level at 14914.50.

Short-Term Outlook

The index is making a vertical rise, which usually indicates it’s getting close to overbought because of extreme values. However, professionals don’t look at oscillators or indicators to tell them a market is overbought. They look at the order flow, volume and chart pattern.

A higher-top, higher-bottom, higher-close chart pattern will indicate the buying is still strong. A higher-top, lower-close chart pattern on higher than average volume will indicate the presence of sellers. This won’t change the main trend to down, but if confirmed it could lead to a 2 to 3 day pullback into 15047.25 to 14967.75.