Traders have been extremely bullish on the NASDAQ100 Futures (CME: NQ), with the Tech Heavy index now up 25.78% year-to-date. The index is on its way to recovering the significant losses incurred in the prior year.

Risk-on sentiment abounded as the Federal Reserve turned to a 25 basis point rate hike over the jumbo-sized 50 basis points in the last interest rate decision. Traders took the softer rate hike as a sign of a possible peak in rates, and now the market expects the Fed to pause in the upcoming meeting with chances at nine times out of ten. In addition, a pause has been supported by softening U.S. economic data, leading to the resurrection of risk-on in the past few weeks.

Technical

The NASDAQ100 Futures has pointed higher, with the price now trading within an ascending channel pattern, leaving behind its 100-day moving average. The 13701.50 level now acts as support after the index powered through the level undoing its resistance.

If bullish momentum hangs onto the market, the 14280.50 level will likely come into play, given that bears do not undo the momentum for any fundamental reason. Alternatively, given that the Relative Strength Index points to overbought levels, with price trading at the resistance of its ascending channel pattern, a reversal is probable. Bearish traders could look to the 13701.50 level with interest if they intend to lower the index.

Summary

With the looming FOMC Minutes and Core PCE Index, the NASDAQ100 Futures will either consolidate or move short distances as traders anticipate what the key events could mean for risk sentiment. If the U.S. economy shows further moderation, the NASDAQ100 Futures could approach the 14280.50 level in the medium to long term as rate hikes become less likely.

Sources: Reuters, TradingView