The Nasdaq 100 futures (CME: NQ) has been on fire in the opening half of the year, with the bulls blazing to 14-month highs and a 30% year-to-date performance. However, it was time for a quick intermission in the early Wednesday session, as traders took disappointing Chinese data as a signal to take a breather and reflect ahead of the grand finale next week – the eagerly anticipated Federal Reserve interest rate decision.
On Tuesday, the World Bank briefly assisted the equity market by upgrading its global GDP growth outlook for 2023 from 1.7% to 2.1% while revising its 2024 outlook downward from 2.7% to 2.4%. However, volumes remain relatively low ahead of next week’s interest rate decision, with the CME FedWatch Tool predicting an 80.6% probability of a pause, before resuming the hiking cycle in July. In China, both imports and exports remained in contractionary territory, forcing traders to take some risk off the table.
Technical
The 4H chart shows an ascending channel, where the futures have remained relatively subdued in recent sessions, as the market retreated on Wednesday to trade around the daily pivot point at 14,571.5.
Support is established at 14,509.25 if the pivot point support does not hold, where the market could hesitate to move further down on the optimism around the technology sector. However, if support fails, the channel support at 14,452.25 (S2) presents another hurdle to the bears. If S2 gets broken down, lower support at 14,329.50 could become topical in the upcoming week.
However, with the Federal Reserve likely to pause next week, the bulls could find buying momentum to remain above the pivot support at 14,571.5. From there, they could continue forming new multi-month highs, with resistance established at 14,690.75 (R2) and 14,758.00 (R3).
Summary
There was slight profit-taking on Wednesday, triggered by weak Chinese data that dampened the sentiment. However, with the pivot point at 14,571.5 remaining intact, the bulls could push higher to 14,690.75 and 14,758.00.
Sources: Koyfin, Tradingview, Reuters
