Last week, the Nasdaq100 Futures (CME: NQ) experienced a rebound following a brief dip, marking a pause in five consecutive weeks of gains. Currently trading flat week-to-date, the futures market awaits key economic indicators for direction.
This year, the Nasdaq100 Futures have set record highs, driven by positive sentiment surrounding tech stocks, particularly chipmakers. Nvidia’s optimistic revenue outlook further bolstered this sentiment, propelling the index futures higher.
However, attention now shifts to the release of the PCE Price Index, the Federal Reserve’s preferred gauge of inflation. Traders are keen to assess whether the current restrictive monetary policy environment will impact the upside potential of the index futures, given the upbeat outlook for tech stocks. The outcome of the PCE reading, along with reports on GDP, jobless claims, and manufacturing activity, will provide valuable insights into the timing of potential rate cuts, shaping market sentiment and trading decisions in the days ahead.
Technical
The Nasdaq 100 futures have demonstrated a clear uptrend, evident from trading above the 100-day moving average within an ascending channel pattern.
Following a brief dip below the moving average, oversold RSI conditions at the lower boundary of the ascending channel spurred buying activity, leading to the formation of support at 17372.75. Subsequently, the futures crossed above the moving average but encountered resistance at 18121.50 amid overbought RSI conditions, resulting in a minor downturn.
The 100-day moving average closely tracks the uptrend, potentially serving as a downside point of interest if bearish momentum persists. Conversely, further upside momentum could prompt a retest of the 18121.50 resistance level. A breakout above this level on high volumes could indicate sustained bullish interest, possibly extending gains to the 23.60% Fibonacci Extension level.
Summary
Amidst a rebound in the Nasdaq100 Futures, attention shifts to inflation data’s impact on the index’s upside potential. Technical analysis suggests an uptrend, with the 100-day moving average as a key support and the 18121.50 resistance level pivotal. Traders await the PCE Price Index release for further direction.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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