The Nasdaq-100 index (NDX) recently experienced a bounce after a decline that brought it close to a downside target of 26,350. This decline followed a failed breakout from a bullish cup-and-handle pattern that initially suggested an upside target of 33,200.
The bounce originated from a critical support zone between 25,000 and 26,000, where three significant support levels converged: an uptrend line from early 2025 lows, the 38.2% Fibonacci retracement of the 2025-2026 rally, and former 2025 highs.
Historically, buying during declines of 15% to 25% has been beneficial for investors, although the 2022 decline of nearly 36% raises concerns about the current market conditions. The key question now is whether this bounce will lead to new highs or if it will establish lower highs, indicating a potential longer downtrend.
Frank Cappelleri, founder of CappThesis, emphasizes that the follow-through of this rally is critical; any strong selling after the bounce could reignite downward momentum