TL;DR
• The market just finished a powerful five-day, 300-point rally, driven by a combination of seasonal tailwinds and a critical technical pattern.
• The real engine behind the move was the "Failed Breakdown," a classic institutional setup designed to trap short sellers and ignite a squeeze.
• Today's sideways action is a necessary pause. The key question is whether this is a healthy consolidation building energy for another push higher or the beginning of a top.
• The entire plan for tomorrow hinges on one critical support level. Holding it keeps the bulls in control, but a failure to do so would be a major warning.
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We have officially shifted from a strong, one-sided uptrend into a consolidation phase. After a massive rally, price needs time to digest the move. This digestion happens either through time, where price chops around in a range, or through price, which involves a direct selloff. Today, we saw the beginning of a time-based consolidation. This period can be messy and difficult to trade, so patience is your best asset right now. The market is building a cause for its next major move.
• The Failed Breakdown: This was the signature setup that powered last week's entire rally. It is the footprint of institutional accumulation. The pattern works like this: price makes an aggressive move down, breaks a clear support level, and then quickly reclaims that same level. This action traps breakout sellers who went short, forcing them to buy back their positions and adding rocket fuel to the reversal. We saw a perfect example of this last Tuesday when the 6701 support level was flushed, reclaimed, and then led to a 150-point rally to 6850.
The structure has shifted from a clean trend to a battleground around key levels. Here is what matters most.
• Major Resistance: 6850. This level represents the top of a month-long channel and was the logical stopping point for the rally. It is the main hurdle bulls need to overcome.
• Key Pivot Level: 6825. This is the most important level for the next session. We dipped below it today and quickly recovered, showing buyers are still present. Holding above 6825 keeps the immediate bullish bias intact.
• Underlying Support: 6701. This was the launchpad for the last major leg up. If 6825 were to fail decisively, this would be the next major area of interest for buyers.
The plan is to defer to the prevailing trend, which is still up, but to act only on confirmation.
My focus remains on support at 6825. As long as the market holds this level, or briefly traps below it before recovering, the path of least resistance is higher. The upside targets would be 6877, 6888, 6903, and then 6930.
If we cannot hold 6825, the bullish thesis is paused. Choppy, two-sided action would be expected, and it would be best to stand aside and wait for a clearer setup to emerge. There is no high-probability trade if we are simply stuck in a range without testing key boundaries.
Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before making investment decisions.