• Nasdaq Emini futures (NQ) needs to close a 4 hour candle below this VWAP, anchored from this pivot point (the low of 09 August), in order for bears to fully put their foot on the gas, and bulls to break up.
  • VWAP is a trading benchmark that shows the average price of a security based on volume and price. VWAP helps traders price a security's trend and value. If professional bulls believe that this trend up should continue, when the price reaches the VWAP line, or close to it, they would want to buy, believing they got an attractive price before Nasdaq continues its uptrend. Otherwise, they would not buy, perhaps even sell, and Nasdaq would lack the buying pressure that is needed to sustain its rally, especially at such a late stage in the rally, where more traders think that Nasdaq futures is "overbought".
Nasdaq futures anchored VWAP as key level
Nasdaq futures anchored VWAP as key level
  • Still, we are in a pullback after a long rally, and today (18 Aug) still seems to be, and will probably close, as another pullback day. This would be the 3rd pullback day since 16 Aug. Three pullback days so late in a very strong bull rally of apx 24%, since 16 June, is not only natural, it is even considered by most traders as the expected scenario. In short, a pullback is still expected to continue.
  • What are the key levels to watch? Besides a 4 hour candle closing below the aformentioned VWAP line, the following Nasdaq technical analysis video presents key lines and prices, first and foremost, a key previously broken resistance (and now that line is a support that is acting as a magnet that is pulling price to it, or close to it, to test it)

Nasdaq futures technical update, 2 hours before the standard market opening hours:

  • NQ price chart with the 4 hour candles shows that the VWAP line is still acting as support, and the 20 EMA is acting as resistance. These are the key levels to watch.
  • Once the market opens, traders can watch for a 4 hour candle to close above the 20 EMA, or below the VWAP.
  • Those that seek additional confirmation can wait for a follow up 4 hour candle that will strengthen the same direction and not reverse Nasdaq futures.
  • A close above is a sign for the bulls to buy and for the short traders to cover their shorts. A close below the VWAP, means bears can enter and increase their short positions.
  • Swing traders that are in doubt can always exit half their positions and let the rest ride (that is usually a good principle to follow when in doubt).
NQ futures for 18 Aug, price is trapped within the VWAP below and the 20 EMA above
NQ 4 hour candles. Between VWAP the 20 EMA.

On August 19th, the significant levels to keep an eye on for Nasdaq futures are as follows: The previously conquered point of resistance, which is currently serving as support, is located at around 13325.

Trade the Nasdaq at your own risk. Visit ForexLive technical analysis for further perspectives.