Nasdaq 100 Technical Warning Signs Flash Amid Market Sell-Off

Published by Ecem EFE

13 June 2025, 14:00 published

Nasdaq 100 Bears Take Control After Ascending Wedge Breakdown

The Nasdaq 100 e-mini futures experienced a sharp decline of -1.80% during today’s Asian session, reflecting renewed risk-off sentiment amid escalating geopolitical tensions. The catalyst behind this market sell-off is Israel’s recent airstrikes on Iranian nuclear and military facilities, which have heightened fears of broader regional instability.

Oil Prices Spike as Strait of Hormuz Supply Concerns Escalate

Energy markets reacted strongly to the unfolding conflict, with oil prices surging over 10% amid concerns about potential disruptions in the Strait of Hormuz, a critical chokepoint for global oil shipments. Both WTI and Brent crude saw significant gains, intensifying worries about energy supply constraints. This surge poses a substantial challenge to the US Federal Reserve’s plans to cut interest rates later this year.

Federal Reserve Rate Cut Expectations Under Pressure

According to the latest data from the CME Fed Watch tool, the market currently prices in a 98% probability of a 25 basis points rate cut in the September FOMC meeting, bringing the Fed funds rate down to a target range of 4.00%-4.25%. This would mark the first rate reduction after the Fed’s hold since December 2024.

However, the recent spike in oil prices is likely to force the Fed into a more cautious “wait and hold” stance. Higher energy costs could exacerbate inflationary pressures, limiting the Fed’s ability to ease monetary policy and potentially tightening liquidity conditions in the short term.

Market Impact: Liquidity Tightening and Tech Sector Vulnerability

This anticipated liquidity tightening may trigger a negative feedback loop for US equities, with the Nasdaq 100—known for its higher beta—expected to suffer larger declines relative to the broader S&P 500 and Dow Jones Industrial Average. Today’s price action confirms this vulnerability, as the Nasdaq 100 CFD Index has broken down through key support levels.

Technical Analysis: Key Resistance and Support Levels

Short-term pivotal resistance now stands at 21,700/21,770.
A decisive break below 21,640, which aligns with the 20-day moving average, could open the door to further declines.
Intermediate supports lie at 21,180/21,030, followed by a critical zone near 20,690, close to the 200-day moving average.

Chart Patterns Signal Further Weakness

The Nasdaq 100 CFD Index has recently broken below a minor bearish “Ascending Wedge” pattern that had been in place since the May 23, 2025 low. This breakdown is a bearish technical signal, often indicating a continuation of downward momentum.

Intraday losses of -1.7% have erased all gains made earlier this week, specifically wiping out advances since Monday, June 9. This reversal suggests the formation of a potential minor top on June 11, a critical inflection point in recent price action.

Furthermore, the daily RSI momentum indicator has formed a bearish divergence and fallen below a key parallel support line, reinforcing the probability of sustained weakness in the near term.

Implications for Investors and Market Outlook

While geopolitical risks continue to weigh heavily on markets, the combination of surging energy prices and tighter monetary policy expectations creates a complex backdrop for US equities, especially the tech-heavy Nasdaq 100. Traders and investors should monitor the key technical levels closely, as any sustained breach could signal a deeper correction phase.

Key Takeaways:

Nasdaq 100 e-mini futures drop -1.80% amid geopolitical tensions.
Oil prices surge over 10%, complicating Fed’s rate cut plans.
Market pricing shows a 98% chance of a 25bps rate cut in September.
Technical breakdown below the 21,640 support level raises risk of further declines.
Bearish RSI divergence and ascending wedge breakdown signal downside momentum.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.