Nasdaq futures are teetering after the Federal Reserve’s hawkish rate cut, but the 21340 level has proven resilient so far. This technical point has become a battleground, with traders debating whether it will anchor a rebound or pave the way for deeper losses.
Technical Analysis Highlights
Following a sharp drop triggered by the Fed’s latest decision, Nasdaq futures managed to hold above 21340.75 during the height of the selloff, suggesting respect for this key support level. However, momentum indicators paint a mixed picture:
- MACD: The Moving Average Convergence Divergence (MACD) has crossed downward, signaling bearish momentum.
- RSI (14): The Relative Strength Index remains within its long-term uptrend, indicating potential resilience.
Traders are likely to focus on how the price action unfolds as European and U.S. markets come online, with thin Asian trading volumes offering little clarity.
Possible Trading Scenarios
- Bullish Setup:
- If the price tests and holds 21340 again, this could present a buying opportunity with stops placed below the level.
- A break above 21608 would offer another potential long setup, targeting resistance levels closer to record highs.
- Bearish Setup:
- A break below 21340 without a recovery could trigger short positions, with stops above the level for risk management.
- Nearby levels such as 20984 and the critical 50-day moving average are worth monitoring, with a breach of the latter potentially opening the door to further declines toward 20400.
Broader Market Context
Despite the dramatic market reaction to the Fed’s updated projections, the adjustments were relatively minor. The Federal Reserve signaled a slower pace of rate cuts, removing just one 25bps cut from its forecast by the end of 2027. Market positioning may have amplified the reaction, rather than any substantial policy shift.
In fact, the market’s anticipated terminal rate for the federal funds is still approximately 70bps higher than the Fed’s dot plot. This discrepancy suggests the selloff may not be sustained once traders reassess the broader outlook.
Key Takeaway
For now, the Nasdaq’s 21340 level remains a focal point for traders. Whether this support holds or breaks will likely determine the next phase of market direction. As the dust settles from the Fed’s decision, technical and momentum signals will guide strategies, with traders eyeing both bullish and bearish setups as possibilities.
