By assessing time, price, volume and momentum with technical indicators, the Nasdaq futures contract (NQ) can be analyzed for potential trade opportunities. Insights from technical analysis could provide buy or sell signals or an indication of potential trend reversals or market moves.
The following 3 technical indicators are frequently used when analyzing futures markets:
- Parabolic Stop & Reversal (SAR)
- Volume (VOL)
- Momentum Oscillator
The Parabolic SAR (Stop and Reversal) indicator can be a helpful tool for traders to determine the end point of a current trend. Dots are placed above or below a price trend to show bullish (below) or bearish (above) buy or sell signals.
The chart below of the Nasdaq futures contract (NQ) during October – August of 2017 is an example of using the Parabolic SAR day trading indicator to spot market changes:
Watch the video below for an introduction on how to analyze charts with the Parabolic SAR indicator on NinjaTrader’s online trading platform:
The Volume Indicator (VOL) displays the number of financial instruments traded during a specific period of time. Volume spikes signal surges in buy or sell activity and often act as a prelude to potential market reversals or large price action moves.
The chart below of the Nasdaq futures contract (NQ) during October – August of 2017 is an example using the VOL Indicator to spot a sudden increase in buying or selling activity:
The Momentum Oscillator can be used by traders to show potentially overbought or oversold market conditions. Displayed below, as a second chart panel, the Momentum Oscillator represents the speed and strength of a trend over time. The greater the value above the horizontal signal line, the greater the probability is of increased price movement and vice versa.
The following chart featuring the daily Nasdaq futures contract (NQ) from October – August of 2017 is an example of the momentum oscillator increasing ahead of moves within the market:
As always, remember past performance is not indicative of future results and you should always trade within your risk tolerance levels.