- Composite index drop confirms bearish dominance.
- Relief rallies mark a corrective, not bullish, trend.
- $109.5K is key support; reclaiming above zero may trigger rebound.
The bearish market structure has become increasingly evident, as the composite index has slipped below the crucial −0.4 threshold. This technical signal typically indicates that sellers have taken control of the market. Compounding the bearish sentiment is a negative spread between fast and slow Exponential Moving Averages (EMAs), further reinforcing the prevailing downtrend.
Adding to the bearish narrative, the price is now positioned in the lower region of the 21-day Donchian Channel—a tool often used to gauge volatility and trend direction. Such a position suggests weakness in price momentum and confirms that bulls are currently on the back foot.
Relief Rallies, Not Reversals
Despite some brief price bounces, these movements are best interpreted as relief rallies rather than genuine bullish trend reversals. The market has entered a corrective range-bound mode, meaning that price action is likely to remain choppy and directionless in the short term.
In this type of environment, traders should exercise caution. Over-optimism during minor rallies could lead to premature entries. Instead, a more defensive strategy may be warranted until a more convincing trend shift occurs.
Eyes on the $109.5K Support Level
The most crucial level to watch now is the $109.5K support. If the market manages to hold this area, it could provide the foundation for a potential recovery. Moreover, if the overall market structure can climb back above the zero level on the composite index, it would signal a transition back to a bullish regime.
A successful reclaim of bullish structure would open the door for a retest of the $117.7K resistance zone, indicating renewed buying interest and potentially the start of a new uptrend.
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