Is the Nasdaq 100 in a Minor Wave 4 Correction or a Larger Bearish Trend?

The Nasdaq 100 (NDX) has been a rollercoaster ride for investors in 2025, swinging between optimism and caution. , , sparking a critical debate: Is this a healthy minor wave 4 correction setting up a final bullish wave 5, or the beginning of a deeper bearish trend? Let's dissect the Elliott Wave dynamics and technical indicators to find out.

Elliott Wave: A Minor Correction or a Bigger Picture?

According to multiple Elliott Wave analyses, the NDX appears to be in a within a larger bullish impulse. , but analysts argue it's part of a classic zigzag pattern. , according to analysis. However, , as forecasted.

The overlapping corrective patterns observed since October suggest the market is "breathing" rather than panicking. While the pullback resembles a textbook 4th wave, . This aligns with the idea that the index is merely pausing before resuming its long-term bullish trajectory according to analysis.

The technical indicators and Elliott Wave dynamics are crucial for assessing the index's next move. Analysts closely monitor support levels and Fibonacci retracements to differentiate between a minor correction and a larger bearish trend.

Technical Indicators: Divergences and Diverging Signals

Technical indicators like RSI and MACD are painting a mixed picture. The RSI (14) has shown between waves 3 and 5, indicating weakening bullish momentum despite higher highs as reported. This divergence is a red flag for a potential reversal. Meanwhile, the MACD histogram has also contracted, reinforcing the bearish case according to Elliott Wave analysis.

However, there's a silver lining: in the RSI and MACD suggest the downside momentum is losing steam. For instance, as observed. This creates a "buy the dip" scenario for bulls, who argue the index is setting up for a final wave 5 push.

The interplay between RSI and MACD signals remains a key focus for traders and investors. A clear divergence in the RSI (14) suggests weakening bullish momentum, while the MACD histogram offers further insight into the strength of the current trend. These indicators help traders evaluate the likelihood of a reversal or continuation in the index's trajectory.

The key technical levels to watch are (a critical support for wave 4 validity) and (a psychological and Fibonacci hurdle). If the NDX reclaims 24,652 with conviction, . Conversely, , as forecasted.

Fundamentals: AI and Earnings vs. Inflation Fears

On the fundamental front, the Nasdaq 100's long-term story remains compelling. Analysts at Naga.com highlight that AI-driven growth and strong earnings from tech giants could propel the index above 30,000 over the next five years according to projections. However, this optimism is tempered by near-term risks: inflationary pressures, potential interest rate hikes, and the specter of an economic slowdown.

The challenge for bulls is convincing investors that the current correction is a buying opportunity rather than a warning sign. While technicals suggest the pullback is corrective, fundamentals must align for a sustainable rally. If the Fed signals rate cuts in 2026, the Nasdaq 100 could regain its upward thrust. But until then, volatility is likely to persist.

Conclusion: A Tug-of-War Between Correction and Collapse

The Nasdaq 100 is caught in a tug-of-war between technical resilience and bearish sentiment. The Elliott Wave structure and divergences in momentum indicators suggest the index is in a minor 4th wave correction, . However, the overlapping corrective patterns and bearish divergences cannot be ignored-they hint at a potential breakdown if key levels fail.

For investors, the takeaway is clear: Stay nimble. If the NDX reclaims 24,652 with strong volume, it's a green light for aggressive buying. But if it breaks below 24,000, defensive positioning becomes prudent. The coming weeks will be critical in determining whether this is a setup for a final bullish wave or the start of a deeper bearish chapter.