The Nasdaq100 Futures (CME: NQ) faced a setback in Monday’s trading session, halting a two-day winning streak and indicating a potential shift in momentum.
With a notable 70 basis points decline for the current session, traders are now likely contemplating whether the recent upward movement is reaching its conclusion.
Previously, market sentiment had been buoyant for the Nasdaq100 Futures, largely due to optimistic outlooks from prominent tech companies. Notably, Nvidia delivered exceptional results, with a staggering 126% increase in revenue to $60.9 billion for fiscal 2024. The surge in demand for accelerated computing and generative AI technologies has generated enthusiasm among investors, particularly regarding the earnings potential of select tech stocks, thus driving the index futures higher. As traders anticipate insights from the Powell Testimony and the release of U.S. Nonfarm Payrolls data this week, scrutiny of the index futures will likely be heightened.
Technical
The Nasdaq100 Futures have been exhibiting a strong uptrend, supported by both the ascending channel pattern and the index’s position above the 100-day moving average. This validation of the uptrend was further reinforced when buying activity surged at the 17372.75 level, coinciding with oversold RSI conditions. Consequently, the index futures experienced a notable rally, establishing the 17372.75 level as a robust support zone.
However, as the rally extended to the 18372.75 level, overbought RSI conditions emerged, triggering a subsequent downturn with this level acting as resistance. Currently, the index futures have retraced towards the 23.60% Fibonacci Retracement level, potentially serving as an intermediate support.
Should buyers reemerge and validate this level, a retest of the 18372.75 resistance is likely. Conversely, a breakdown below the 23.60% level on high volume could indicate increased bearish pressures, potentially targeting the 50% Fibonacci Retracement level as a downside target.
Summary
As the Nasdaq100 Futures retreat after testing a fresh peak, attention shifts to pivotal technical levels. A retest of the 18372.75 resistance is possible if buyers reemerge, while a breakdown below the 23.60% Fibonacci Retracement level may signal increased bearish pressures, targeting the 50% level. Traders await Powell’s testimony and U.S. job data for further cues.
Sources: U.S. Bureau of Economic Analysis, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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