Amidst a backdrop of shifting market sentiments and escalating global tensions, the Nasdaq 100 Futures (CME: NQ) find themselves navigating through a turbulent landscape. With a fourth consecutive week of losses looming, the index futures are currently trading 2.32% lower week-to-date.
The recent surge in U.S. economic indicators in recent weeks, punctuated by robust Nonfarm Payrolls data and an acceleration in inflation, initially tempered expectations of imminent rate cuts. Furthermore, with resilient retail sales reported this week, along with the ongoing geopolitical uncertainties, markets are now recalibrating towards a risk-off sentiment, favouring safe haven assets like the U.S. Dollar and bonds.
Federal Reserve Chair Jerome Powell’s cautious stance on interest rate cuts further muddied the waters, adding to the index futures’ downward pressure. As investors brace for a flurry of earnings reports from tech giants like Netflix, Tesla, Meta Platforms, Microsoft, and Alphabet, the week ahead promises heightened volatility and strategic positioning.
Technical
The Nasdaq 100 Futures are currently entrenched in a downtrend, with price action languishing below the critical 100-day moving average. A descending channel pattern accentuates the prevailing downward trajectory, underscoring the bearish sentiment dominating the market.
Recent trading sessions witnessed intensified selling pressures, culminating in a notable resistance forming at the 18350.75 level. Amid this downturn, however, signs of a potential reversal emerged as oversold Relative Strength Index (RSI) conditions prompted the emergence of support at the 17615.25 level. A modest rebound from this support is currently underway, with the index futures edging closer to the 23.60% Fibonacci Retracement level.
Should bullish momentum persist, a breakthrough beyond this threshold could pave the way for further upside gains, potentially targeting the 38.20% retracement level. Conversely, a resurgence of selling pressure could precipitate a reversal, prompting a retest of the critical 17615.25 support level.
Summary
Navigating through a turbulent landscape, the Nasdaq 100 Futures face intensified selling pressures amid global geopolitical tensions. With the index entrenched below the 100-day moving average and resistance at 18350.75, a reversal is likely to occur from the 17615.25 support level amid oversold RSI conditions. Investors brace for heightened volatility amid tech giants’ earnings reports.
Sources: Reuters, CME, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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