Nasdaq 100 Bear Flag Suggests Another 10% Drop

Technical analysis of the Nasdaq 100 indicates a potential for further downside. The index, a key tech sector gauge, has pulled back significantly, currently trading about 11.5% below its recent high. Following a sharp drop of almost 14%, the price action has entered a consolidation phase, exhibiting a sideways to slightly upward trend. This pattern is strongly suggestive of a bear flag, a bearish technical formation that typically emerges after a steep decline and signals a continuation of the downward momentum.

Reinforcing this bearish view is the fact that this bear flag is developing below a crucial resistance trendline. This trendline, which originated from the January 2023 lows and had previously acted as support, has now been broken, potentially indicating a change in market dynamics and the conclusion of the prior bullish trend. The convergence of the bear flag and the broken support trendline strengthens the case for a substantial move lower. Based on typical bear flag behavior, a decline of approximately 10% from the point where the price breaks below the flag could be expected in the near future. This would represent a continuation of the initial sharp decline. Therefore, the technical picture for the Nasdaq 100 suggests a cautious stance for investors, given the possibility of further significant price drops.