E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – February 26, 2014 Forecast

March E-mini NASDAQ-100 Index futures are trading higher ahead of the opening. Today, investors will get the opportunity to react to the latest U.S. New Home Sales data and a few fourth-quarter earnings reports. The fundamentals aren’t the story at this time, however. The real story is the sustainability of the current rally. Even though the index has traded as high at 3701.50, upside momentum has slowed considerably since the market traded 3684.75 on February 18.

At the time of the first high, the index was moving up at a pace of greater than 32 points per day. Currently, it is trying to maintain a pace of 16 points per day. This puts the nearest major support angle at 3636.00.

From the near-term low at 3638.25, uptrending Gann angles come in at 3702.25, 3670.25 and 3654.25. Overtaking the steep angle at 3702.25 will put the index in a strong position.

The new short-term range is 3638.25 to 3701.50. This range has formed a retracement zone at 3669.75 to 3662.50. Since the main trend is up on the daily chart, this zone is the first support area. Buyers are likely to step in on a test of this zone in order to defend the uptrend. The key support cluster to watch is 3670.25 to 3669.75.

The main trend is up. The trend will turn down when 3638.25 is taken out. The hardest factor to determine at this time is momentum. Traders have a difficult time predicting momentum and volatility and have to be willing to react. Even if the market rallies through 3701.50, it is still vulnerable to a potentially bearish closing price reversal top if the move is made on low volume.

Since the main trend is up, investors should continue to trade the upside, but they have to pay close attention to the momentum. The first clue of a momentum shift is usually a closing price reversal top on the hourly chart. If this occurs, then investors may decide to pare positions and aggressive short-sellers may decide to show up to defend the developing bearish chart pattern.