Nasdaq Futures Analysis for Today

TradeCompass for Nasdaq Futures – January 21, 2025

Current Overview:The Nasdaq Futures (NQ) is trading at 21,623, hovering just above yesterday’s close. With a small movement so far (+0.14%), the market lacks directional bias at this time.

Key Levels to Watch for Nasdaq Futures Today:

Bullish Bias Above 21,665

This level aligns with:

• The developing Value Area High (VAH) of today’s volume profile.
• Yesterday’s VWAP at approximately 21,655.

Bearish Bias Below 21,545

This level sits:

• Below Friday’s VWAP.

Profit Targets for Nasdaq Futures Day Traders:

Bullish Targets for NQ Today:

1. 21,677 – Just under the first upper standard deviation of today’s VWAP (quick target).
2. 21,697 – Slightly below yesterday’s POC (21,700).
3. 21,749 – Just below today’s second upper VWAP deviation.
4. 21,772 – Under yesterday’s Value Area High.
5. 21,845 – For runners aiming at the third upper standard deviation of both yesterday’s and Friday’s VWAP.

Bearish Targets for NQ Today:

1. 21,532 – A quick exit for risk management, near Friday’s Value Area Low.
2. 21,508 – Slightly above today’s Value Area Low.
3. 21,452 – Just above the Value Area High from January 16 (Thursday).
4. 21,402 – Above the POC from January 17 (Friday).
5. 21,328 – For extended targets, near the Value Area Low of January 16.

Summary of the TradeCompass for Today’s Nasdaq Futures Analysis:

NQ has got a fairly tight range of about 100 points before it hits the bullish or bearish threshold identified by the TradeCompass, so considr waiting for direction with a break above 21,665 or below 21,545. Wait for these levels to act as a compass for direction:

• Above 21,665 signals bullish continuation.
• Below 21,545 confirms bearish momentum.

Use partial profit-taking at interim levels and maintain discipline with stops. Trade at your own risk and visit ForexLive for additional insights. Stay tuned to the TradeCompass for updates on other instruments throughout the day

Value Area Low (VAL) Explained

The Value Area Low (VAL) is a key concept from Market Profile. It represents the lowest price within the Value Area, which is the price range encompassing 68% of market activity around the Point of Control (POC). Traders often view the VAL as an area of support in uptrending markets or resistance in downtrending markets.

Due to its role as a boundary for significant market activity, the VAL is frequently used in conjunction with other indicators to identify high-probability trade entry and exit points. It is sometimes referred to as the Lower Value Area.

Value Area High (VAH) Explained

The Value Area High (VAH) is the highest price within the Value Area, also derived from Market Profile. Like the VAL, the VAH marks a boundary containing 68% of market activity around the POC.

Traders often use the VAH as a resistance level in uptrending markets or as a support level in downtrending markets. Its importance as a turning point makes it a popular tool for identifying trading opportunities, particularly when paired with volumetric stats or other technical analysis methods. The VAH is also referred to as the Upper Value Area.

Point of Control (POC) Defined

The Point of Control (POC) is the price level with the highest traded volume within a session. This makes it a significant area of focus for traders, as it reflects where the majority of transactions occurred, indicating a level of agreement between buyers and sellers.

The POC is a dynamic level that can act as a magnet for price during the trading day, especially if the market moves away from it and then retraces. Its position relative to the Value Area provides traders with clues about market sentiment:

• A high POC within the Value Area may signal bullish momentum.
• A low POC within the Value Area may indicate bearish sentiment.

VWAP Defined and Its Importance

The VWAP (Volume Weighted Average Price) is a dynamic indicator that calculates the average price of a security based on its volume and price traded throughout the day. It provides a benchmark for both institutional and retail traders to gauge fair value.

VWAP is often used to:

1. Identify Market Sentiment: Price above the VWAP indicates bullish sentiment, while price below suggests bearish sentiment.
2. Set Entry and Exit Points: Traders use VWAP and its standard deviations to find support/resistance levels.
3. Manage Risk: VWAP can help place stop-loss orders or determine profit targets.

Why These Levels Matter to Traders Seeking a Map or Compass

The VAL, VAH, POC, and VWAP collectively form a compass for traders, offering a clear structure to navigate the day’s price action. Here’s how they guide decisions:

• Key Levels as Anchors: VAL and VAH define boundaries of balance, helping traders identify support and resistance.
• POC as a Magnet: Price often gravitates toward the POC, providing insights into potential retracement or consolidation areas.
• VWAP for Context: By tracking average price weighted by volume, VWAP reflects where value exists and whether market sentiment is bullish or bearish.

When used together, these tools help traders anticipate price movements, define risk levels, and identify high-probability trade setups. This structured approach ensures traders can act with greater confidence, leveraging these levels as their “map” for the trading day.

Trade the Nasdaq at your own risk and visit ForexLive.com for additional views.

This article was written by Itai Levitan at www.forexlive.com.