In today’s technical analysis, we’re looking at NASDAQ 100 E-mini Futures (NQ) with key levels, indicators, and the volume profile. NQ has been rallying like most indices now up over 37% for the past year. There has been a slight consolidation after the August pullback which is to be expected as traders who were long take profits. However, the buying power is still very strong as the chart continues to make higher highs and higher lows. The question is whether the bulls will be strong enough to break above the all-time high or not.
Key Levels and Observations:
- Point of Control (POC):
- The thick red line on the volume profile marks the POC, which is near 19,766. This level represents the price where the highest volume of trading has occurred, making it a significant support level. Price has bounced off this area recently, indicating its strength as support. If we see the price drop and test this level once more, it is likely that we will see this level continue to hold the price up for at least a while. We are going to have to see a significant economic event to cause a drop below this price in the short term. There’s also a rising trendline extending from the mid-August lows, which intersects near the 19,900 level. This confluence with the POC adds more conviction that this area will act as support.
Resistance Levels:
- All-time high (ATH) at 21,086 acts as the main overhead resistance.
- R1 Pivot Resistance is at 21,086.25, which aligns closely with the ATH.
- R2 Pivot Resistance is at 21,911.25, which could be a longer-term target in a strong uptrend.
Trading Opportunities:
Bullish Trade Setup (Buy at POC support):
- Entry: Look for entries around the 19,766 level, where the POC and the 50-day SMA converge. If the price dips towards this level again, it would be an excellent opportunity to buy into support with a tight stop.
- Stop-Loss: Set a stop slightly below the rising trendline and 100-day EMA, around 19,500 to give the trade room.
- Targets:
- First target: 20,399.50 (current price area for quick profit-taking).
- Second target: 21,086 (ATH resistance).
- Third target: 21,911.25 (R2 Pivot Resistance) for an extended move.
Bearish Trade Setup (Fade the ATH resistance):
- Entry: If the price reaches the ATH area of 21,086 and shows signs of reversal (candlestick patterns like shooting star, bearish engulfing), you could take a short position expecting a pullback towards the POC or trendline.
- Stop-Loss: Above 21,100 to 21,150 (above the R1 Pivot and ATH).
- Targets:
- First target: 20,399 (current price and minor support).
- Second target: 19,900-19,766 (trendline and POC support area).
Breakout Play (Long above ATH):
- If the price breaks above the 21,086 ATH with strong volume and momentum, you could take a breakout trade.
- Entry: Above 21,100.
- Stop-Loss: Below 21,000.
- Targets:
- First target: 21,911 (R2 Pivot Resistance).
- Longer-term target: 22,000.
Final Call:
- Short-term: Bullish above 19,766 with a target of 20,399 and 21,086.
- Medium-term: Watch for potential breakout or rejection at the ATH. A breakout would turn the outlook more bullish toward 21,911.
- Long-term: Bullish as long as the trendline and POC support holds, but pay attention to signs of exhaustion near resistance zones.
