In a whirlwind of volatility, the Nasdaq100 Futures (CME: NQ) witnessed a rapid December surge followed by a dramatic downturn as bearish forces made precision strikes. This week alone, the index futures plummeted by 3.77%, signalling a tumultuous start. The sudden reversal was triggered by a global stock sell-off, fostering caution among investors and eroding prior optimism fuelled by anticipated interest rate cuts as soon as March 2024.
The market sentiment shift, notably evident in reduced bets on Federal Reserve rate cuts for March, declined from a 73.4% probability to 62.7% within a brief span. This sentiment sway gained momentum with stronger-than-expected ADP employment figures, signalling robustness in the US labour market.
As global investments pivot towards safer havens, the strengthened US dollar, coupled with declines in index futures, amplifies the market’s turbulence. The unexpected surge in Nonfarm payrolls, surpassing expectations at 216K, further weighs on the index futures, potentially deepening the bearish pressures.
The Nasdaq100 Futures faced a steep decline, breaching the 100-day moving average, signalling a significant downturn.
A resistance level emerged at 17165.25 amid overbought RSI conditions. The plunge pushed below a critical support at 16758.50, now serving as a potential resistance level. The index futures are currently inching towards a major support at 15792.50, marking a pivotal level formed from the massive rally in December 2023. The current position below the 50% Fibonacci Retracement level suggests sustained bearish pressures, potentially approaching the 61.80% Golden Ratio.
Given the oversold RSI conditions, the Golden Ratio might trigger a potential rebound, with the 16758.50 level likely eyed for possible upside movement. Conversely, a substantial breakdown below the Golden Ratio could reveal persistent selling pressure, potentially guiding the index futures towards the major swing low at 15792.50. Market sentiment teeters on this critical juncture as the index navigates between crucial support and resistance levels.
Navigating a whirlwind of volatility, Nasdaq100 Futures underwent a swift downturn after a rapid December surge. Declining 3.77% this week amid bearish pressures and global caution, the breach of key support levels near 16758.50 hints at intensified bearish momentum. Yet, the Golden Ratio might signal a potential rebound, teetering on pivotal support-resistance dynamics, reflecting the tug-of-war between market forces.
Sources: Automatic Data Processing Inc, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.