Market has again flirted with the 8,000 for the past two weeks only for us to find it pulling back again. Last week’s pullback seems to be telling us that the breakout won’t be anywhere soon.
Some traders may view our pullback toppish-looking but given the economic fundamentals that we have, we see a definite breakout to happen within 6 months time. Aughost is just around the corner. Will the market breakout in a time when most people least expect it to happen? If not, the quarter-end bulls will most likely be the one to push it beyond 8,000.
Short-term, we may see deeper corrections even to as low as 7,100-7,500. Long-term the market is generally locked in a huge consolidation.
The most important principle to remember is that the more times the resistance is touched, the more significant it is and the more powerful the resulting move will be. 8,000 isn’t a tough resistance to break. The market has touched it and flirted around it for a couple of weeks 3x times in the past 2 years. I believe the strong breakout of 8,000 is just a matter of time.