After a quiet start to the pre-market session, March E-mini NASDAQ-100 Index futures surged to another record high on Wednesday. The market continues to bounce back from a steep sell-off that was sparked by worries over the coronavirus.
Investors remain attuned to the coronavirus outbreak but seem to be acting as if the problem is primarily confined to China. Soaring Tesla stock is also helping to drive the technology-index higher. Tesla’s shares have risen 36% to a record high in just the past two sessions alone. Nonetheless, traders are worried that gains have come too far, too fast. Furthermore, traders are wondering if short-covering is driving the market higher.
At 08:56 GMT, March E-mini NASDAQ-100 Index futures are trading 9454.75, up 99.75 or +0.99%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out yesterday’s high at 9369.25. A trade through 8966.00 will change the main trend to down.
The biggest worry for investors should be Tesla’s performance. Since the rapidly rising stock helped drive the index to record highs, it certainly can take it down if traders decided it was overvalued.
The best sign of a top will be a daily closing price reversal top.
Daily Technical Forecast
Based on the early performance, the direction of the March E-mini NASDAQ-100 Index the rest of the session on Wednesday is likely to be determined by trader reaction to yesterday’s close at 9355.00.
A sustained move over 9355.00 will indicate the presence of buyers. Additional support is being provided by a pair of steep uptrending Gann angles at 9373.50 and 9350.00.
Crossing below the uptrending Gann angle at 9373.50 will be the first sign of weakness. Turning lower for the session on a trade through 9355.00 will be the second sign of weakness, while a break through the angle at 9350.00 will indicate the selling is getting stronger.
The angle at 9350.00 is a potential trigger point for an acceleration to the downside with the nearest target angle coming in at 9158.00, followed closely by another uptrending Gann angle at 9149.50.
A close under 9355.00 will form a closing price reversal top. If confirmed by follow-through selling, this could trigger the start of a minimum 2 to 3 day sell-off.
This article was originally posted on FX Empire
More From FXEMPIRE:
- EUR/USD Mid-Session Technical Analysis for February 5, 2020
- US Stocks Rise on China Stimulus, Tesla Short-Squeeze – But is Rally Sustainable?
- Gold Could Reach $2,000 as Early as This Year
- Traders decided to ignore the 2019-nCoV
- Gold Price Futures (GC) Technical Analysis – Strengthens Over $1557.80, Weakens Under $1550.30
- E-mini S&P 500 Index (ES) Futures Technical Analysis – Needs to Hold Above 3327.50 to Sustain Momentum