Weekly Chart

It is clear that the bears gained control last week, as the market closed at a low, 0.75 points below the previous week's open, signaling the potential continuation of the bearish trend in the coming week. However, several factors complicate the outlook:

  • With Christmas approaching, markets typically exhibit a bullish bias during the holiday season.

  • The weekly close occurred at the bottom of a wedge pattern within a narrow trading range.

  • After a strong bull run marked by three consecutive bullish bars, it’s difficult to see an immediate reversal.

Given these conditions, it's likely that the bears will struggle to push the market lower next week. The most probable scenario is a consolidation within a trading range. If bearish momentum persists, the market could retest the 6000 level, with a worst-case scenario being a drop to around 5930-40.

Daily Chart

Over the course of last week’s five trading days, the only bullish action occurred on Wednesday, when a bull bar formed as the CPI data was released. It's worth noting that on Friday, a large tail appeared at the top of the daily bar (mainly formed during the pre-market session), suggesting that bulls were attempting to break out again, but it failed.

The daily bars have formed a lower high double top, which likely marks the starting of the bearish trend in a trading range. As analyzed earlier, the likelihood of a trading range forming next week is higher than a continuation of the bearish trend. However, the exact lower boundary of this range remains uncertain.

Personally, I lean towards the trading range scenario for the following reasons:

  • Bears are unlikely to be satisfied with just halting their push lower at the current level since the weekly chart closed 0.75 point lower than the open of a week ago.

  • There was a notable two-leg upward move in December after Trump’s election win.

  • Both the 6000 level and the 5930-5940 zone provide clear(though not strong) support.

Given these factors, a trading range seems like the most plausible outcome in the near term.