E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Next Decision: Chase Higher or Play for Dip?

December E-mini NASDAQ-100 Index futures are trading sharply higher on Thursday as the Federal Reserve kept its promise to let loose monetary policy remain intact. The market also gained as investors lifted their hedges in the U.S. Dollar and Japanese Yen as worries over a contested U.S. presidential election faded.

At 21:05 GMT, December E-mini NASDAQ-100 Index futures are at 12074.50, up 311.50 or +2.65%.

Additionally, stocks jumped as bets on Republicans retaining control of the Senate eased worries of major policy changes that could hurt corporate America under a Joe Biden White House, even as the presidential election hung in the balance.

The U.S. central bank on Thursday pledged again to do whatever it can in coming months to sustain a U.S. economic recovery. Despite the reiterated pledge, the Fed may need to act further to boost the economy if there is no large fiscal spending, though others note that it is running out of tools.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but momentum has been trending higher since the closing price reversal bottom on November 2 and its subsequent confirmation the next day.

A trade through 12249.00 will change the main trend to up, while a move through 12444.75 will produce a new all-time high. A trade through 10942.25 will reaffirm the downtrend.

The minor trend is up. It changed to up on Thursday when buyers took out 12022.00. This move also shifted momentum to the upside.

The main range is 9390.50 to 12444.75. Its retracement zone at 10917.50 to 10557.25 is the major support. This current rally started at 10942.25, just above this zone. This indicates that investors were looking for value following the last break.

The minor range is 12249.00 to 10942.25. Its retracement zone at 11749.75 to 11595.50 is support. Trading on the strong side of this area has put the index in a bullish position.

Short-Term Outlook

Given the current upside momentum, we’re looking for the rally to challenge the pair of main tops at 12249.00 and 12444.75. We could see profit-taking come in on the first test of this area, which would be considered normal.

At some point investors are going to want to chase this market higher. In this case they will be looking to buy a pullback into a value area, so keep an eye on the 50% to 61.8% retracement areas for support and the next buying opportunity.

Holding above the Fibonacci level at 11749.75 will be the first sign of strength.

Trading between 11749.75 and 11595.50 will indicate investor indecision.

A break under 11595.50 will indicate the selling is getting stronger. This should lead to test of at least 50% of the entire rally from 10942.25.

We have a bias to the upside because of the momentum. We’ll buy strength with tight stops, and buy any weakness into a retracement zone value area.