The daily June E-mini NASDAQ market confirmed Wednesday’s closing price reversal top when it broke through 2730.00. The market is now set up for a 2 to 3 day break equal to at least half of its last rally. Although a closing price reversal top indicates that the selling is greater than the buying at current price levels, it does not necessarily mean a change in the trend.
Currently, the June E-mini NASDAQ contract is testing a long uptrending Gann angle at 2718.50. This angle has provided support for 64 market days. Recently the index broke through this angle, but quickly recovered. At a minimum, expectations are for traders to react the same way if this angle is broken. This means that a break into the uptrending Gann angle from the 2569.50 bottom at 2665.50 is likely over the near-term.
A failure to hold the Gann angle at 2665.50 will mean that selling pressure is building. This should lead to the completion of a 50 to 61.8 percent retracement of the rally from 2569.50 to 2748.50. This retracement zone has been identified as 2659.00 to 2637.75.
In summary, a potentially bearish closing price reversal top has been confirmed. This should lead to increased selling pressure as long as this top isn’t violated. The first downside target is 2718.50, followed by a steep drop-off to another target at 2665.50. If this price can’t hold as support then look for further weakness to 2659.00 to 2637.75.
