Image source: Pixabay

With no clear new catalysts emerging, markets have appeared hesitant to fully commit to a seasonal year-end rally. The S&P 500 Index (SPX) has remained locked in a tight consolidation range since late November, failing to push to fresh highs. On the upside, the 6,900 mark has remained the level to beat, advises Fawad Razaqzada, technical analyst at TradingCandles.

Downside momentum has also been limited, however, reinforcing the view of a range-bound market waiting for direction. The key question remains: what will provide the next catalyst, and will it be bullish or bearish?

As the year draws to a close, a clearer theme has emerged: mega-cap technology stocks that have driven this bull market may be losing their ability to lead on their own. Investor confidence in the sector is seemingly being tested, especially around stretched valuations and whether heavy investment in Artificial Intelligence (AI) can still be justified.
 

From a technical standpoint, the broader bullish trend has remained intact. As long as the shaded blue support zone between roughly 6,790 and 6,812 can hold, as it has done over the past few sessions, the bulls should remain relatively comfortable. This area represents former resistance and aligns with the 21-day exponential moving average.

A decisive break below this region would, however, bring the bears back into play. In such a scenario, the 6,731 mark would become the next downside target, followed by the psychologically important 6,700 level. A deeper pullback could expose the 6,600 level as a more medium-term bearish objective.

For now, the trend is still your friend – but bond yields and tech direction may soon decide how long that remains the case.

About the Author

Fawad Razaqzada provides retail and professional traders succinct fundamental and technical analysis on his own website at TradingCandles.com. He is an experienced analyst and economist working for leading global FX brokers, most recently at FOREX.com and City Index. A graduate of Brunel University with a degree in economics, Mr. Razaqzada offers premium trade signals to subscribers, and trading education to help shorten the learning curves of developing traders.

He covers a wide range of markets, including forex, commodities, stock indices, and cryptocurrencies. Mr. Razaqzada is an expert at reading price action, which together with his deep understanding of economics and market fundamental allows him to provide a unique style of financial market analysis. His market comments are regularly quoted by the leading financial publications such as Reuters and Market Watch.

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