Examining the weekly chart for the index, the index remains affected by AB=CD bearish harmonic pattern and this pattern is ideal and formed within an ascending channel that was breached recently. Now, the index settles among the 23.6% and 38.2% Fibonacci levels for the harmonic pattern.
In general, the harmonic pattern continues to affect the index so long as no new patterns evolve to negate the first one, and within the majority of the patterns if point D remains intact the effect of the pattern continues. In 2011, the index was able to touch the second target for the pattern and approached the first extended target, at the 61.8% and 78.6% Fibonacci levels of CD leg at 10790.00 and 10225.00 respectively, where this happened before the rebound towards areas among 12075.00-11585.00. There are clear technical contradictions that force us to mention some factors before suggesting the possible scenarios for the upcoming year. Steady trading below 12075.00 is considered a factor that supports the continuing effect of the harmonic pattern. On the other hand, we notice the positive effect from Fibonacci fans, where price rebounded from the fans levels, in addition to the positivity of the exponential moving average 20 and 50 which form a good support for the index. As a result, we need further confirmations for the next possible move, the harmonic pattern will continue to be valid if trading continues below 12075.00 level, as this level is the 23.6% of CD leg, where stability below that level might lead towards further downside action targeting 11585.00, and attempting to breach this level heading towards 10790.00 passing by the minor support at 11190.00. By breaching 10790.00 we may see further decline to 10225.00 which is the extended target for the harmonic pattern and may be further and below 10000.00 mark. On the other hand, the harmonic pattern will weaken dramatically if the index settles again above 12075.00, where we may witness a noticeable incline targeting 12590.00 followed by 12870.00 and maybe above 13000.00.
The technical story does not end here, as we might see a sideways range trading period if the index fails to breach 10790.00 to the downside or 12750.00 to the upside.