After trading higher for three days, the June NASDAQ E-mini futures contract is retreating on Thursday following a test of a major retracement zone. Since the last break was 137.25 points in 10 trading days, from this morning’s top at 2735.00, swing chart analysis is protecting a potential move to 2597.75 by May 2.
At this time there are two key ranges at work. The first was formed by the 2569.50 bottom to the 2791.50 top. This range created a retracement zone at 2680.50 to 2654.25. The low earlier in the week hit squarely on the 61.8 percent retracement level, or the lower boundary. Shorts covered and bottom-pickers stepped in at this level, triggering a near-term correction.
This correction took the NASDAQ futures contract back to 50 percent to 61.8 percent of the break from 2791.50 to 2654.25, stopping at 2735.00, or inside of the retracement zone boundaries at 2722.75 to 2739.00. Based on Thursday’s action, the high at 2735.00 appears to be attracting fresh selling pressure which could trigger enough momentum to take out the recent bottom at 2654.25.
If this bottom fails along with the Fibonacci level then shorts are likely to press the market harder while weak longs scramble to bailout. Should this selling pressure continue over the next 10 market days then the June NASDAQ E-mini futures contract would be on course to reach its 2597.75 target by May 2.
One potential guide for this market will be the downtrending Gann angle from the 2791.50 top. This angle is at 2695.50 today and is moving down at a rate of 8.00 points per day. On May 2, this angle will be at 2615.50. So as long as the market can straddle or remain under this angle, let’s say it’s on course to balance price and time.
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