The Nasdaq Composite has entered a phase of weakness after a stellar run that peaked around the 20,000 mark. The recent breakdown from key support structures, combined with momentum shifts, suggests a notable change in trend — but there are also early signs this correction may be approaching exhaustion.
Let’s break down the current structure, momentum, and what to watch for next.
Key Technical Observations
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The index peaked around 20,000 and began a significant sell-off after breaking below the rising trendline in February 2025. This trendline had supported the rally since the 2022 lows.
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Price has fallen below both the 21 and 34 weekly EMAs, which are now converging and almost forming a bearish crossover (a “dead cross”) – highlighted in red. The opposite event (golden cross) happened in May 2023, which marked the start of a strong rally.
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RSI and MACD showed clear bearish divergence ahead of the top — a classic early warning sign of a trend reversal. Since then:
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RSI has plunged below 40, suggesting entry into bearish momentum territory.
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MACD has crossed below the zero line, also a classic bear market signal.
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Positive Technical Signs (Potential Bullish Reversal Clues)
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Long-term uptrend still intact: Despite the short-term weakness, price remains within the broader rising channel, which has contained all Nasdaq price action since 2020.
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RSI has now dipped just below 30, which historically has coincided with major price bottoms (green circles), such as the COVID low (2020) and the bear market bottom in mid-2022.
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MACD histogram is deeply negative — while still bearish, this often precedes momentum reversals after extreme sell-offs.
Bullish Scenario
If this recent move turns out to be an exhaustion sell-off:
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RSI below 30 could mark a short- to medium-term bottom, similar to past reversals.
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A rebound back above the 15,700–16,500 range is reclaiming broken horizontal support, turning it back into a base.
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The bullish case would strengthen if price climbs back above the EMAs, invalidating the pending dead cross.
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A move back toward 18,500 and possibly 20,000 could follow, especially if macro conditions stabilize or improve.
Bearish Scenario
If bearish momentum persists and the current support fails:
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The EMAs will complete a bearish crossover, reinforcing downward momentum.
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A loss of the long-term channel support would suggest the correction is evolving into a full bear phase.
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The next major horizontal support levels lie around 15,200, 14,400, 13,000, and 11,800.
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A breakdown below 13,000 would risk a full retracement toward 10,300–11,000, where the index consolidated in late 2022.
Final Thoughts
The Nasdaq is at a critical technical junction:
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Momentum is clearly bearish, and trend-following indicators (RSI, MACD, EMAs) all support a cautious stance.
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But at the same time, the index is technically oversold, and historical patterns suggest this is a zone where reversals often occur.
Whether this becomes a major correction within a long-term bull trend, or the start of something deeper, will depend on what happens in the next few weeks — especially around the 15,200–16,500 support zone and the behavior of RSI as it attempts to recover from oversold conditions.
