The NASDAQ100 Futures (CME: NQ) leapt 1.12% in Wednesday’s trading session as U.S. Inflation came in softer than expected, slowing to below 5% for the first time in two-year. The probability of a Federal Reserve rate pause increased to 91.5%, bringing optimism to equity markets that interest rates may have peaked.
Today, traders will turn to the Labour Market reports to determine where the interest rate outlook could point to. If interest rates are genuinely coming toward their peak, equities could rally as borrowing costs could take a turn for the better, while expansion through debt could become cheaper in the medium to long term.
The NASDAQ100 Futures has sustained its uptrend with price trading above the 100-day moving average and occasionally bouncing off it. Support and resistance were formed at the 12635.00 and 13345.00 levels, respectively.
Bullish traders have had the final word on the direction of the index after the price was first supported at the 61.80% Fibonacci Retracement Golden Ratio and the 50% level subsequently. The momentum that built up at the 50% Fibonacci Retracement level led the index into a high volume breakout above the resistance level. A leg up is probable, with bulls likely aiming for the next point of interest at the 13701.50 level.
A reversal is likely if the bullish momentum loses steam, validated by declining volumes to the upside. Bears will likely look to the 13345.00 level as a point of interest in a bear case.
The NASDAQ100 Futures are firmly pointing higher, given the breakout above the resistance level of 13345.00 with conviction. The level will likely be of interest to bearish traders, while the 13701.50 level entices bullish traders.
Sources: U.S. Bureau of Labor Statistics, CME FedWatch Tool, Reuters, TradingView