Nasdaq 100 Elliott Wave Setup: Navigating the Final 5th Wave

The technical setup for the Nasdaq 100 remains firmly bullish, with the index advancing within a powerful impulse wave. After holding the critical November 21 low, the market has staged a clean rally, confirming the structure we outlined in December. The current move is the third wave of a third wave, labeled as orange W-3 of gray W-iii, which itself is part of the final green 5th wave. This is a classic continuation pattern, where the trend is intact and buyers are in control.

The immediate bullish target for this W-3 wave is a key level to watch. We expect the rally to ideally reach ~26825. That target sits just below the recent high and represents the peak of this sub-wave. Following that, a corrective pullback is anticipated, with the primary target for the W-4 wave set at ~26155. This would be a healthy retracement, allowing the market to consolidate before the final leg up.

The major long-term support level, which acts as the ultimate bull/bear line, is the November 21 low of 23,854. A break below this level would invalidate the current bullish wave count and signal that the uptrend has failed. For now, the structure is intact, and the path of least resistance is higher. The index is trading in the 25700s, well above the warning levels, and the setup suggests the rally to the 26,825 target is the next logical move.

Key Supply/Demand Levels and Trend Integrity

The immediate supply and demand balance is now defined by a tight range of moving averages and recent price action. The 20-day moving average at 25,466 acts as the primary support level. A break below this line would signal a loss of short-term momentum and could trigger a deeper correction toward the November low.

On the upside, the key resistance is clear. The index faced immediate selling pressure at the high of 25,735 from earlier this week. That level now serves as the ceiling for the current rally. The 5-day moving average at 25,662 is also a critical marker, showing recent buying pressure after the pullback. It's a dynamic support that the market has respected in its upward move.

The trend integrity remains intact. The index is trading above both the 5-day and 20-day MAs, confirming the bullish bias. The path of least resistance is still higher, aiming for the 26,825 target. However, the market is now in a consolidation phase between these key moving averages and the 25,735 resistance. Watch for a decisive break above that high to signal the start of the final leg up.

Momentum and Volume: Confirming the Wave Move

The momentum picture is neutral, which fits the current consolidation phase. The 14-day RSI sits at 46.228, squarely in the middle of the 0-100 scale. This isn't overbought, which would signal exhaustion, nor is it oversold. It confirms the market is in a balanced state, digesting recent gains without a clear directional bias. The MACD is negative, adding a slight bearish tilt to the momentum oscillator stack, but the RSI reading is the more relevant signal for overbought/oversold conditions.

Volume is the real tell for institutional conviction. The current volume of 518.6 million shares shows steady participation, but we need to watch for spikes. A decisive breakout above the recent high of 25,735 must be accompanied by a significant volume surge to confirm that big buyers are stepping in. Conversely, a breakdown below the key support of 25,466 would require heavy selling volume to signal that institutional supply is overwhelming demand. Until we see those volume spikes, the move remains a low-volume consolidation.

Catalysts, Risks, and What to Watch

The setup now hinges on a few key levels. The primary bullish catalyst is a daily close above the recent high of 25,735. That break would confirm the start of the final leg up, targeting the next major resistance at 26,182. From there, the path to the W-3 target of ~26,825 opens. Watch for volume to spike on that breakout; a low-volume move would raise doubts about institutional conviction.

On the flip side, the warning levels are clear. The first major bearish trigger is a break below 25,639. That would signal the rally is stalling and could lead to a deeper pullback toward the 25,428 and 25,086 support zones. A decisive move below 25,086 would invalidate the current wave count and force a re-evaluation. The ultimate bearish trigger is a break below the 200-day moving average at 23,212. That would confirm the long-term uptrend has failed and open the door to a significant correction.

The bottom line is one of defined risk. The market is in a consolidation between the 20-day MA at 25,466 and the 5-day MA at 25,662, with the 25,735 high as the immediate ceiling. The bullish wave count is intact as long as price holds above the warning levels. But the path to the 26,825 target requires a decisive break above that recent high. Until then, the market is pausing, and traders must watch these specific levels for the next directional move.