The market closed Friday with a double-distribution profile structure, while the volume profile suggests short-covering behavior near the highs. The POC around 6888 is the key level for determining intraday bias, with 6870 acting as secondary support in the event of a pullback.

The market opened with a gap higher, which increases the likelihood of rotational behavior as traders lean on the developing value area. There is a reasonable probability of a gap fill, as overnight lows appear unsecured. In this context, the POC should act as the primary support level.
 

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From a macro perspective, capital inflows into Bitcoin suggest a risk-on tone, while strength in gold may signal underlying caution. Dr. Copper started the week positive, which is supportive for equities. Crude oil is higher due to geopolitical tensions around Venezuela, introducing inflationary expectations. A slightly weaker dollar is supportive, and last week’s decline in the VIX provides additional tailwinds.

On the rates side, rising inflation expectations and a higher 10-year yield could introduce pressure, partly driven by Japanese yields moving to new highs following last week’s rate hike. This adds to the currently conflicted macro backdrop.

Given these mixed signals, a rotational approach remains favored, with an increased likelihood of a pullback to fill the gap, followed by reloading core long positions. The credit markets remain healthy, supporting this view, and a Santa rally remains possible.

With a shortened holiday week ahead of Christmas, price action may slow as participants await Tuesday’s GDP data, which could provide the final volatility impulse for the week.

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