March E-mini NASDAQ-100 Index futures are trading higher late in the session on Monday, following through to the upside following Friday’s dramatic closing price reversal bottom. Before we get too excited, keep in mind that the market still has to overcome key resistance levels before we can signal all-clear.
The rally was fueled by a number of factors including an easing of bond yields, positive progress toward a new fiscal stimulus package and the approval of a third coronavirus vaccine in the United States. Economic news also showed U.S. manufacturing activity increased to a three-year high in February amid an acceleration in new orders.
At 21:50 GMT, March E-mini NASDAQ-100 Index futures are trading 13314.25, up 403.25 or +3.12%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, but the confirmation of Friday’s closing price reversal bottom shifted momentum back to the upside.
A trade through 13900.25 will change the main trend to up, while a move through 12662.25 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The minor trend is also down. A trade through 13353.75 will change the minor trend to up. This will confirm the shift in momentum.
The index is currently trading on the strong side of a retracement zone at 13195.75 to 13029.50, making it support.
The new minor range is 13900.50 to 12662.25. Its retracement zone at 13281.50 to 13427.50 is potential resistance.
The next major move by the March E-mini NASDAQ-100 Index futures contract will be determined by trader reaction to the minor retracement zone at 13281.50 to 13427.50.
Since the main trend has now turned down, trend traders are going to start selling inside 13281.50 to 13427.50. They are going to try to form a secondary lower top in an effort to trigger a resumption of the downtrend.
Aggressive counter-trend buyers are going to try to trigger a breakout over 13427.50. Their mission will be to try to establish support at or over this level in an effort to create enough upside momentum to fuel a rally into a new high.
For a look at all of today’s economic events, check out our economic calendar.