Sentiment: Bearish

Previous Weekly Analysis:

Weekly Chart:

(note this is a monthly chart, indicating how strong the bearish is)

This week played out bearishly, as I had anticipated. However, I made some significant misjudgments regarding the market's intermediate movements.

Last week, I concluded that the 50% retracement level from August 2024 to the all-time high (ATH) had been tested with strong selling pressure based on price action. I did not expect the market to rally so much before ultimately collapsing. Initially, I believed the pullback (PB) would not significantly exceed the 50% level. However, I changed my mind sharply after seeing the market behavior on Monday and Tuesday. Particularly on Tuesday, which followed through on Monday’s breakout (BO) and gap up, I assumed the market was on its way to recovery.

By Wednesday, the strong bearish bar was not surprising since the market was still in a bear trend. However, given the strength of the bulls on Monday and Tuesday, I expected the bears to slow down and find support around the bottom of the bull bars, forming a sideways pattern. Thursday’s doji bull bar reinforced this expectation—it often signals the first light of recovery. At this point, I had shifted from a bearish stance to a more neutral outlook, hoping that a reversal was in progress.

But Friday completely shattered that expectation, producing the largest bearish bar in the past two months, with a 139.25-point drop!

Key Takeaways

1. Turning More Bearish: It is becoming increasingly difficult to justify bullish positions. I should avoid buying assets unless I see a strong bullish bar or enough time for a sideways consolidation.

2. 5500 as Initial Support: The trendline from April and August 2024 suggests that 5500 will act as the first Support. If the market fails to consolidate sideways for a few days at this level, the likelihood of testing 5300 and 5200 (the channel’s starting point) increases significantly.

3. Major Bearish Zone: The most critical support level lies between 5000-5200, which aligns with the bottom of the channel formed in October 2022 and October 2023.

4. Unlikely Immediate Reversal: A sharp, immediate bullish reversal seems improbable. The best-case scenario would be the market transitioning into a sideways range between 5500-5800 (potentially 5900) over the next few weeks.

Daily Chart:

There isn’t much to add beyond what was covered in the weekly analysis. I initially expected the market to reach 5880-5900 for a 50% pullback (PB) of the small range (right rectangle), which would have signaled a potential bottom around 5550. However, after two days of rallying, the market never reached 5880-5900 and instead formed a fake breakout (BO) at the 50% level of the larger range (left rectangle). This is a very bearish signal for the bulls.

Key Takeaways

1. The market is likely to continue lower, with a greater than 50% chance of breaking below 5500, given the strong bearish monthly and weekly bars.

2. I hope that 5200-5500 will act as a consolidation zone, where the market could eventually reverse.

3. As long as there is a bullish pullback (PB), consider selling some assets (e.g., BA). Avoid buying any assets for now. However, I will continue intraday trading, as I usually ignore the higher time frame (HTF) trend for short-term trades, even though the broader market remains bearish.

15 Mins Chart

I still need to improve my ability to reassess past market behavior. While I focus on intraday trading, I should always review at least the last five days' price action on a 15-minute chart before making decisions.

Looking back, it’s now very clear that Wednesday’s retracement found support at the lower end of Monday’s gap (5720), which explains why Thursday was a sideways day. However, I should have noticed the following:

1. Thursday formed a converging triangle, meaning there were no higher highs (HH) or lower lows (LL). Given the overall bearish higher time frame (HTF) trend, this triangle had a higher probability of breaking downward.

2. If point 1 held true, then once the breakout (BO) of the converging triangle occurred, I should have sold all profitable positions instead of holding and hoping for support to form below.

Key Takeaways

1. Monday and Tuesday were difficult to trade, but Wednesday and Friday were relatively easier.

2. Looking for high-quality setups is far more important than constantly trading or always being in a position.

3. 5500-5600 will be a crucial support zone for bulls next Monday to Wednesday, otherwise, the chance to go to 5300 is higher than 50%.