After a strong start to the week, Emini futures faced sharp declines across the board, wiping out Monday's gains and sending a cautionary signal to traders.
Despite hitting new highs, the overbought conditions triggered profit-taking, setting the stage for potential buying opportunities. Here’s a breakdown of key levels and what to watch for in the upcoming sessions.
Emini S&P December Futures
The S&P 500 Futures December contract reached 5918 before running into heavy profit-taking. Monday's strong gains vanished as the index pulled back to 5850. The contract broke support at 5898/88, but found footing at the 5850/40 level.
Looking ahead, more downside could be on the horizon, with a potential buying opportunity around 5810/5790. For long positions, stops should be placed below 5780. Upside targets include 5830, 5850, and possibly 5870.
While the broader bullish trend remains intact, I’m cautious about shorting any recovery. Overbought conditions may lead to some sideways consolidation, but I'm watching for a pattern to emerge before making any new calls.
Nasdaq December Futures
The Nasdaq 100 Futures also faced a surprising collapse after surpassing the September high. Support at 20540/500 gave way, sending the index sharply lower. Key support now lies at 20350/250, backed by short-term moving averages and a 5-week trend line.
For those looking to go long, stops should be set below 20200. A break lower could take the market down to 19950/850, a more attractive buying level, with stops recommended below 19700.
Emini Dow Jones December Futures
The Dow Jones December contract hit a new all-time high of 43445, but a sudden reversal left a bearish engulfing candle on the daily chart. The pullback has brought the market to test support at 43000/42900.
If this level breaks, the next buying opportunity lies at 42660/620, with stops advised below 42500. There’s a solid chance the market could find a low for the day around these levels, but caution is warranted, and traders should be ready for further volatility.
In summary, while the bullish trend remains intact for Emini futures, the recent pullbacks provide key buying opportunities for those looking to take advantage of market dips. Keep an eye on these levels and manage risk accordingly as the market looks to consolidate its recent gains.