The Nasdaq100 Futures (CME: NQ) have ignited a robust streak, marking an impressive seven consecutive weeks of upward trajectory. This week, the futures index exhibits a 38 basis point increase, demonstrating resilience within its sustained uptrend. The recent surge in risk appetite has been a pivotal force propelling these futures higher, indicative of an optimistic market sentiment prevailing among traders.
This buoyant sentiment finds its roots in mounting expectations of potential rate cuts as early as 2024, fuelled by dwindling inflation figures and dovish statements from the Federal Reserve. These elements have significantly shaped market perceptions and contributed to the recent upward momentum in the Nasdaq100 Futures.
As the week progresses, traders eagerly anticipate crucial economic data releases that could sway the trajectory of the index futures. Today’s awaited announcements on U.S. GDP growth rate and jobless claims hold particular significance. Additionally, the impending release of the PCE Price Index on Friday, a vital inflation indicator for the Federal Reserve, is poised to influence market sentiments.
Technical
During Wednesday’s session, the Nasdaq100 Futures surged to an unprecedented pinnacle, hitting a record high at 17073.50. This sharp ascent signals a significant shift in trajectory, steering away from a prior downtrend and marking a pivotal turn, reshaping its path.
Initially entrenched in a descending channel pattern, the index futures trended below the 100-day moving average. However, a critical pivot emerged around 14140.25 at the channel’s lower boundary, galvanising a robust surge in price catalysed by oversold RSI conditions.
The subsequent bullish thrust propelled the index futures beyond the 100-day moving average and the confines of the descending channel. Surpassing the 16071.75 resistance level, established in July, underscored a sustained bullish drive. Although a temporary retreat momentarily pushed prices below this level, the momentum swiftly regained ground, steering the index higher.
Should this bullish momentum persist, traders could anticipate setting a new pinnacle, eyeing the 17073.50 level as a key upside point of interest. Conversely, a potential reversal from the present overbought RSI levels might redirect focus towards the 16071.75 level as a potential downside marker.
Summary
The Nasdaq100 Futures have shown remarkable resilience amid a streak of upward movement, led by an optimistic market sentiment fuelled by potential rate cuts and dovish cues from the Federal Reserve. Recent technical patterns suggest a possible shift towards new highs, yet the overbought conditions may signal a need for cautious market scrutiny moving forward.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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