Technical indicators suggest the Nasdaq 100’s powerful rally may be losing momentum as bearish divergence, channel breakdown risks, and reversal candlestick patterns point to a potential multi-week corrective decline.
Key Takeaways
- The Nasdaq 100 has rallied 27% since late March 2026, outperforming all major US stock indices amid strong risk-on sentiment and continued momentum in technology stocks.
- Technical warning signs are emerging, including a weekly “Spinning Top” reversal candlestick, bearish RSI divergence, and a break below the medium-term ascending channel support.
- A break below 28,660 on the US NAS 100 CFD may trigger a multi-week corrective decline toward 27,850 and 26,910, while a recovery above 30,560 would invalidate the bearish scenario and reopen upside potential.
Since the global equity market recovery began in late March 2026, the tech-heavy Nasdaq 100 has emerged as the top-performing major US stock index, rallying 27% between 30 March and 15 May 2026 (see Fig. 1).
Fig. 1: Nasdaq 100 with other major stock indices performances from 30 Mar 2026 to 15 May 2026 (Source: MacroMicro).
Rising inflation pressures and surging global bond yields reinforced fears that the Federal Reserve may eventually shift toward rate hikes rather than cuts, with the US 10-year Treasury yield climbing to 4.59% that led to a sell-off in the US stock market last Friday, 15 May. The Nasdaq 100 shed -1.5%.
Also, several technical factors indicate the prior 6-week rally seen in the Nasdaq 100 may have reached a potential bullish exhaustion point late last week.
Let’s unpack in greater detail from a technical analysis perspective.
Emergence of bearish momentum elements
Fig. 2: US NAS 100 CFD medium-term trend as of 18 May 2026 (Source: TradingView).
The price actions of the US NAS 100 CFD (a proxy of the Nasdaq 100 E-mini futures) have formed a weekly bearish reversal “Spinning Top” candlestick pattern for the preceding week of 11 May 2026, which indicates that the prior 6-week rally has reached a tipping point of an overstretched condition (see Fig. 2).
Secondly, after it printed a fresh intraday all-time high of 29,704 on 14 May 2026, the US NAS 100 CFD reversed down and broke below the lower boundary of the medium-term ascending channel in place since the 31 March 2026 low of 22,813.
Before this breakdown, the 4-hour RSI momentum indicator flashed out a bearish divergence condition at its overbought zone (above the 70 level).
These observations suggest that the medium-term uptrend phase of the US NAS 100 CFD may have been damaged, and a potential multi-week corrective decline may be unfolding.
Watch the 30,425/560 key medium-term pivotal resistance. A break below 28,660 intermediate support may expose the medium-term support at 27,850 (also close to the 20-day moving average) in the first step. The next medium-term support rests at 26,910 (also around the 38.2% Fibonacci retracement of the up move from the 31 March 2026 low to 14 May 2026 all-time high).
On the other hand, a clearance and a daily close above 30,560 invalidates the corrective decline scenario for a continuation of the bullish impulsive up move sequence for the next medium-term resistance zone to come in at 31,150/514 (Fibonacci extension cluster).
The information presented is historical information, and past performance is not indicative of future performance.
