The Nasdaq100 Futures (CME: NQ) have been riding a wave of optimism, currently enjoying a three-week winning streak and poised for a potential fourth.
This week, the index futures are trading 77 basis points higher, reflecting market confidence. Boosting this sentiment were remarks from Fed Chair Jerome Powell on Tuesday, indicating no intention of interest rate hikes despite recent inflation concerns. However, a minor dip occurred during the London session as traders eagerly await the U.S. CPI data release.
Analysts project a slight dip in the inflation rate to 3.4%, which, if realized, could strengthen expectations for a potential rate cut this year, potentially fuelling a stronger rally in the Nasdaq 100 Futures market. This anticipation underscores the delicate balance between inflation data, monetary policy, and market dynamics.
Technical
The Nasdaq100 futures have been exhibiting a robust uptrend, supported by technical indicators and market sentiment.
The rally commenced from a critical support level at 17387.75, formed amidst oversold RSI conditions, ahead of a reversal from the prior downturn. This support effectively halted further downside potential, propelling the futures above the 100-day moving average.
Currently, the index futures are approaching a significant resistance level at 18518.75, marking a one-month high. This level presents a key obstacle for further upside movement. If bullish momentum persists, a retest of this resistance level is plausible, indicating continued strength in the market. Conversely, if downside pressure reemerges, traders may find interest around the 100-day moving average, serving as a pivotal support level.
Summary
As the Nasdaq100 Futures near a potential fourth week of gains, optimism prevails amidst market dynamics. With support at 17387.75 and resistance at 18518.75, traders await CPI data for insights into potential rate cuts, highlighting the connection between economic indicators, policy, and market sentiment.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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