The Nasdaq 100 futures (CME: NQ) has been riding the AI-induced technology rally in an electrifying year-to-date performance. Despite Nvidia’s surge that drove the index to dizzying highs, the looming spectre of macroeconomic fears and uncertainty around the debt ceiling agreement has injected a dose of reality into the euphoria, forcing the bulls to take a breath. 

With the Congressional vote on the US debt ceiling agreement taking its course, the market focuses on the upcoming Non-Farm Payrolls (NFP) data on Friday that could hold the key to the Federal Reserve’s impending interest rate decision in June. The CME FedWatch Tool currently projects a 65% probability of a 25bps hike, with the upcoming data expected to force a move in the market’s expectation, which could result in repricing in the equity markets. Traders are currently teetering on the edge, caught between the unstoppable force of AI-driven technology and the immovable object of macro concerns. Will the rally continue its extraordinary ascent, or will the index succumb to the gravity of macroeconomic concerns? 

Technical 

On the 4H chart, a rising wedge has formed as the futures edged lower in the Wednesday session. The daily pivot point at 14,434.50 acts as resistance to the correction, posing a barrier to continuing the uptrend.  

The rising wedge support is at 14,297.25, the 23.6% Fibonacci retracement from the Tuesday peak, where adverse developments in the upcoming data releases could catalyze a breakdown toward 14,170.25. In this case, the macroeconomic concerns could result in a further pullback, where the Fibonacci midpoint and golden ratio at 14,0767.75 and 13,965.00, respectively, could provide support. 

However, if the NFP report reveals a soft print, the technology rally could overcome the recessionary fears, triggering a move above 14,434.50 toward resistance at 14,534.25. If the bulls maintain their momentum, the next potential level of importance is at 14,667.75 (R1). 

Summary 

The technology optimism is currently facing off with undeniable macroeconomic fears. If economic fundamentals support the risk-off macroeconomic sentiment, the bears could defy the odds in a rising wedge breakdown toward 14,170.25. 

Sources: Koyfin, Tradingview