Nasdaq 100 Elliott Wave Analysis: Cautiously Optimistic Despite January Detour

This analysis is based on the FX Empire report [1] published on January 22, 2026, which provides an updated Elliott Wave perspective on the Nasdaq 100 index following a period of heightened volatility. The report acknowledges that the index’s continued bull run “well into April” experienced an “unexpected detour” in mid-to-late January, specifically referencing the January 21 session when the index dropped to 24,954 [1]. This price level proved significant as it represented the 76.4% retracement of the December-January rally—the precise technical level that invalidated the prior bullish wave count and prompted a reassessment to a larger ending diagonal formation [1].

The temporal context of this analysis is particularly relevant given the current market environment. January traditionally represents a period of elevated volatility as traders reposition following year-end portfolio adjustments, and the observed price action aligns with this seasonal pattern. The wave technician’s acknowledgment of the “detour” rather than a complete reversal of the bullish thesis suggests a constructive interpretation of the recent decline as a corrective pause within a larger uptrend structure [1].

Market data for January 22, 2026 reveals the Nasdaq Composite closed at

, representing a 0.11% decline on the day [0]. This followed four consecutive sessions of declines, with the index falling from the January 15 close of 23,530 to current levels—a over approximately one week [0]. The January 21 session proved particularly significant, with the index dropping to 22,927.88 before recovering to close at 23,224.82 (+0.90%) on volume of 7.51 billion shares [0].

The relationship between price action and trading volume provides important context for interpreting the current market structure. Elevated volume on declining days (January 16 at 9.51B shares with -0.53% decline, January 20 at 9.47B shares with -0.81% decline) followed by lighter volume on the bounce day (January 21 at 7.51B shares with +0.90% gain) and the subsequent decline (January 22 at 6.79B shares with -0.11% decline) suggests a potential short-term bottoming formation [0]. This volume contraction pattern during the recovery phase may indicate selling exhaustion, though confirmation would require sustained volume expansion on any bounce attempt.

The original bullish scenario—interpreting the November-January advance as the initiation of a 3rd of a 3rd wave—required revision following the January 21 price action [1]. The analysis now identifies the November-January rally as a 3-wave corrective structure (blue W-a, -b, -c), measuring 0.618x the prior higher-degree gray W-i advance [1]. This measurement confirms the corrective nature of the rally and explains why the index failed to sustain momentum above the January 13 peak of 25,873 [1].

The transition to an ending diagonal (ED) 3-3-3-3-3 pattern represents a significant interpretation change [1]. Ending diagonals typically occur in final wave positions (Wave 5 or Wave C) and are characterized by overlapping price action and wedge-like formations. This pattern suggests the index may be completing a terminal move rather than initiating an extended impulse advance, which carries important implications for target expectations and risk management. The wave technician’s target zone of 27,090-27,380 for gray W-iii (representing 123.6-138.2% Fibonacci extensions of Wave i) remains valid within this revised interpretation [1].

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The relationship between the current price level and key technical thresholds creates a defined risk/reward framework for assessing the bullish thesis. The index currently trades at approximately 23,416, sitting

the critical resistance level of 25,873 required to confirm the 3rd of a 3rd wave initiation [0][1]. Conversely, the index maintains a buffer of the December low of 24,647—a level that serves as the near-term invalidation point for the bullish scenario [0][1].

This positioning creates asymmetric risk parameters that merit careful monitoring. The support hierarchy provides staged warning levels for bulls: 25,602 (first minor warning), 25,400 (second minor warning), 25,086 (third minor warning), and 24,954 (January 21 low—serious warning level) [1]. A break below 24,647 would invalidate the current ending diagonal interpretation and suggest a deeper correction potentially targeting the November 2025 low of 23,854 or lower [1].

The FX Empire analysis contains several areas that warrant additional investigation for comprehensive decision support. The article references RSI and MACD indicators on the accompanying chart but provides no interpretation of their current readings or potential divergences [1]. Given the significant price decline over approximately one week, oscillator readings could confirm or contradict the bullish thesis—particularly regarding oversold conditions or emerging positive divergences.

The analysis is purely technical and does not address fundamental catalysts that could support or impede the 27,000 target [1]. Key fundamental considerations absent from the analysis include Federal Reserve policy expectations, AI/semiconductor sector fundamentals (particularly relevant given the Nasdaq 100’s technology concentration), and corporate earnings trajectory for Q1-Q2 2026. The index’s performance is heavily influenced by major component weights, and sector-specific risks related to NVIDIA, Microsoft, Apple, and other large-cap technology names receive no analysis [1].

Additionally, time cycle analysis is not provided despite the article’s reference to a bull run continuing “well into April” [1]. Specific projected dates for wave completions or cycle turning points would enhance the actionable value of the analysis. Market breadth metrics, including the advance/decline line and new highs-new lows data, are not referenced despite their importance for confirming index movements and detecting divergences [1].

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The analysis reveals several risk factors that warrant attention from market participants. The most immediate risk is

, where a break below (December 2025 low) would invalidate the current ending diagonal interpretation and near-term bullish scenario [1]. This level represents approximately 5.3% downside from current prices and serves as the primary technical boundary between a corrective pause and a more significant trend reversal.

emerges below the 24,647 support zone. A break below (November 2025 low) would represent a major long-term support failure and could signal a deeper correction toward the 22,000-22,500 region [1]. Given that the January 21 low of 22,928 aligns closely with the analysis’s warning level of 22,916 (76.4% retracement level), this zone has demonstrated sensitivity to selling pressure [1].

represents an inherent limitation of Elliott Wave analysis. The report acknowledges that the prior 3rd of 3rd wave scenario was already invalidated once by the January 21 drop to 24,954 [1]. Elliott Wave interpretations are inherently probabilistic rather than definitive, and alternative counts could emerge if price action deteriorates further. Market participants should recognize the dynamic nature of wave count adjustments and maintain flexibility in their technical outlook.

Despite the identified risks, several factors favor the bullish scenario and present potential opportunity windows.

suggest selling exhaustion, with recent decline days showing higher volume than the current bounce day [0]. This pattern, if confirmed by sustained volume expansion on any bounce attempt, could signal the completion of the corrective phase and the initiation of the anticipated advance.

The analysis provides a

that enables staged risk management as the index approaches various support zones [1]. This structured approach allows market participants to adjust position sizing or hedging strategies based on the index’s proximity to key technical levels. The specificity of the support framework—ranging from minor warning levels to major invalidation points—facilitates disciplined risk monitoring.

derived from Fibonacci extensions (27,090-27,380 for gray W-iii) provide clear reference points for assessing the bullish thesis [1]. These quantified objectives enable market participants to establish defined reward-to-risk parameters for potential positions. The identification of 25,873 as the critical resistance level needed to confirm the 3rd of 3rd wave provides an objective trigger for adjusting the bullish thesis [1].

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The FX Empire Elliott Wave analysis presents a cautiously optimistic technical outlook for the Nasdaq 100, tempered by recognition of the January volatility as an “unexpected detour” within a larger bullish structure [1]. The index’s current position—trading approximately 9.5% below the critical 25,873 resistance level while maintaining support above the 24,647 invalidation point—creates a defined risk/reward framework [0][1].

Key monitoring parameters include: watching for a

to confirm 3rd of 3rd wave initiation; monitoring integrity as the near-term bullish thesis test; tracking on any bounce attempt for confirmation of selling exhaustion; and assessing including Federal Reserve policy, corporate earnings, and sector-specific fundamentals that could influence technology sector sentiment [1].

Market participants should note that while the analysis provides specific price targets and support levels, Elliott Wave interpretations are probabilistic rather than definitive. The significant decline to 24,954 on January 21 has already demonstrated the dynamic nature of wave count adjustments [1]. The bullish scenario should be viewed as contingent on the index successfully establishing a base above the 24,647 support zone and subsequently breaking above the 25,873 resistance level to initiate the anticipated 3rd of a 3rd wave advance toward the 27,000 region [1].

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[0] Market Data - Nasdaq Composite (^IXIC) Price and Volume Data, January 8-22, 2026

[1] FX Empire - “Nasdaq 100 Elliott Wave Update: An Unexpected Detour, but Still on Track” (Published January 22, 2026)
URL: https://www.fxempire.com/forecasts/article/nasdaq-100-elliott-wave-update-an-unexpected-detour-but-still-on-track-1574457