Nasdaq 100 futures (NQ)
Technical Analysis

Market Outlook: E-min Nasdaq 100 Futures (NQ)

  • NQ is only 200 points away from its yearly lows.
  • The momentum indicator is firmly in the negative.
  • Why it could be time to sit on our hands.

Recap of last week’s analysis

We pointed out the potential bearish target of $11,592.75, which was our 78% Fibonacci level. It was a clear target for bears, and prices reached the target, going as low as $11,231. (See the image at the bottom of the article)

NQ retesting yearly lows of $11,068.50

The E-mini Nasdaq 100, like most other markets, fell heavily because of the interest rate hike and hawkish Fed comments. This has brought the price tentatively close to breaking this year’s low, which would be a strong sign the bear market is in full force.

At the time of writing, NQ was trading at $11,340, and the low mentioned reference is $11,068.50. That is only a 2.7% drop, a walk in the park for a volatile index like the tech-heavy NQ.

Momentum Indicator

The momentum indicator on the daily chart has been firmly negative, hovering at -1453.50. This further adds to the case that bears are sitting pretty; however, some long trades may be available at these levels if we find support around the yearly lows. We do not think it’s smart to fight the Fed, so the question comes to mind: is it time to sit on our hands for a while?

Daily NQ chart, Momentum Indicator, Fibonacci levels

Time To Sit On Our Hands?

There are times in the market when we must learn to be patient and wait for setups. Looking at current market conditions, we believe that time is now. NQ is at a critical level of potentially breaking to the downside, and because it’s the yearly low in focus, the volatility is expected to be higher than usual. There is also the chance of some support here, but we do not have any clear indication of that right now.

The plan is to wait out the next few days and see if the price attempts to break the low, and if successful, we could drop down to a lower time frame to take shorts on retracements. If it fails to break, we could look for some longs, but we still do not think the upside for long trades is great because of the Fed’s fiscal stance.