KSE-100 Index: Is the Market Preparing for Its Next Major Rally?KSE 100 IndexPSX_DLY:KSE100AlphaEdge_TradingKSE-100 Index: Major Bottom Formation or Another Correction? ABCD Pattern Projects 234,000 AlphaEdge_Trading | Daily & Monthly Technical Analysis INTRODUCTION The KSE-100 Index may be approaching a significant market bottom. While market sentiment remains weak after months of correction and consolidation, our technical analysis highlights several bullish developments that deserve attention. The daily chart is showing a potential bullish RSI divergence, while the monthly chart presents additional signals through RSI structure, volume contraction, monthly LIP support, and Chaikin bullish divergence. The bigger picture suggests that the current weakness could be a corrective phase before the next major upward leg. Our ABCD pattern projects a potential Point D at 234,000. Let's break down the technical structure and the key levels that could determine the market's next direction. 1. THE BIGGER PICTURE: ABCD PATTERN The KSE-100 Index remained in consolidation from December 2024 until May 2025. In May 2025, the market initiated a strong rally that continued until January 2026. The major pattern points are: Point A = 101,598 This marks the beginning of the major rally in May 2025 after the prolonged consolidation phase. Point B = 191,132 The index continued its rally until January 2026, reaching 191,132. At this stage, the RSI developed bearish divergence, indicating that bullish momentum was weakening. Following this signal, the index entered a significant correction. Point C = 144,119 The correction continued until March 2026, when the index reached 144,119. At this point, bullish RSI divergence appeared, suggesting that selling momentum was weakening. The market subsequently recovered and reached a lower high near 188,000 in July 2026. However, the index failed to sustain its upward movement and entered another consolidation phase. Projected Point D = 234,000 If the current consolidation resolves to the upside and the broader bullish structure resumes, the index could develop the final leg of the ABCD pattern toward 234,000. This remains a projected target, not a guaranteed outcome. Price confirmation is essential before treating the pattern as an active bullish continuation. 2. JULY–OCTOBER 2026: CONSOLIDATION AND WEAK MOMENTUM Since July 2026, the KSE-100 Index has been consolidating within a broad range: Upper boundary: 175,000 Lower boundary: 160,000 During this period, the index made several attempts to move higher but failed to sustain those levels. This indicates that sellers have continued to emerge near the upper boundary. However, repeated rejection from resistance does not automatically mean that the broader bullish structure has ended. Consolidation can also represent a base-building phase before a new directional move. The important development is that the latest daily chart shows a potential bullish RSI divergence near the lower end of this range. The RSI readings shown on the chart are: RSI: 38.49 RSI moving average: 36.30 The RSI remains below 50, meaning bullish momentum has not yet been fully established. Nevertheless, the developing divergence suggests that downside momentum may be weakening. A sustained recovery above 175,000 would strengthen the bullish scenario, while continued rejection and a breakdown below support would weaken it. 3. DAILY RSI: POTENTIAL BULLISH DIVERGENCE Bullish divergence occurs when price forms a lower low while the RSI forms a higher low. This can indicate that selling pressure is losing strength. Our daily chart shows a potential bullish divergence near the recent lows of the consolidation range. This is important because the index is approaching a significant support area while momentum may be improving relative to price. If this divergence is followed by stronger price action, it could signal the beginning of a recovery toward the upper boundary of the consolidation range. However, divergence alone is not a confirmation of a market bottom. The index must demonstrate sustained buying pressure and reclaim important resistance levels. 4. MONTHLY RSI: POTENTIAL THIRD-WAVE BOTTOM The monthly RSI is providing another perspective on the broader market cycle. According to our monthly RSI wave interpretation, the third wave is approaching a potential bottoming area. The current structure is also showing a potential hidden bullish divergence. This could indicate that the present weakness is part of a corrective phase within the broader market cycle rather than the beginning of a prolonged bearish trend. As discussed in our previous video, the completion of the third and fourth RSI waves is expected to precede the formation of the market's final major top. Under this interpretation, the current phase could be an important step toward completing the larger cycle before the eventual final top develops. This remains an indicator-based interpretation and should be assessed alongside monthly price action. The monthly RSI structure supports the bullish thesis but does not independently confirm that the bottom is already in place. 5. MONTHLY VOLUME CONTRACTION Monthly trading volume is another important factor in our bottoming analysis. Current monthly volume: 2.65 billion shares. With five trading days remaining in the month, the key threshold to monitor is: 3.85 billion shares If total monthly volume closes below 3.85 billion shares, it would support our volume-contraction thesis. During a correction, declining volume can indicate that participation in selling is decreasing. When this happens near an important support area, it may suggest that selling pressure is approaching exhaustion. Our historical comparisons include: March 2020 market bottom. January 2009 market low. Similar volume behaviour was observed around these historical lows, according to our analysis. These comparisons do not guarantee that the current market will follow the same path. However, they provide historical context for why month-end volume deserves close attention. The final monthly volume reading will help determine whether the current contraction supports the potential bottoming scenario. 6. MONTHLY LIP SUPPORT: 157,040–158,100 The monthly LIP support zone is one of the most important levels in the current analysis. Monthly LIP Support = 157,040–158,100 This zone also coincides with swing support associated with the October and November lows of the previous year. According to our historical observations, the market has staged strong rallies after testing comparable LIP levels. The historical examples identified in our analysis are: June 2006: Index at 8,731. August 2011: Index at 10,982. December 2016: Index at 31,764. Our analysis identifies the current test as the first test of this level in nearly 10 years. Historically, the first test has produced a meaningful bounce in the examples referenced. This makes the 157,040–158,100 zone especially important to monitor. If the index holds this support and bullish momentum develops, the combination could strengthen the case for a major recovery. On the other hand, a decisive breakdown below this zone would weaken the bullish outlook and require a reassessment of the proposed bottom. 7. CHAIKIN INDICATOR: ADDITIONAL BULLISH DIVERGENCE The Chaikin indicator is also showing bullish divergence according to our analysis. This provides another potential signal that the current selling pressure may be weakening. When bullish divergence appears across multiple indicators, particularly near an important support zone, it can strengthen the case for a possible reversal. The Chaikin signal should not be treated as a standalone confirmation. Instead, it should be considered alongside the daily RSI divergence, monthly RSI structure, volume contraction, and the monthly LIP support zone. The strength of this setup lies in the potential convergence of several technical signals rather than any single indicator. 8. BULLISH SCENARIO: THE NEXT MAJOR RALLY Under the bullish scenario, the index stabilizes around the lower part of its current range and holds the monthly LIP support zone at 157,040–158,100. The daily bullish divergence then develops into stronger momentum, allowing the index to recover through the 160,000–175,000 consolidation range. A sustained breakout above 175,000 would strengthen the recovery scenario and suggest that buyers are regaining control. If the broader ABCD structure resumes, the index could eventually move toward the projected Point D at 234,000. The key bullish conditions to monitor are: Holding the 157,040–158,100 monthly LIP support zone. Continued development of daily and monthly bullish momentum signals. Monthly volume closing below 3.85 billion shares, supporting the volume-contraction thesis. A sustained recovery above 175,000. Confirmation of a broader upward price structure. If these conditions align, the possibility of a new major rally would become more credible. 9. BEARISH SCENARIO: WHAT COULD INVALIDATE THE SETUP? Although the bullish signals are encouraging, the market has not yet confirmed a major bottom. A decisive breakdown below the 157,040–158,100 support zone would weaken the bullish thesis. Such a move would suggest that the monthly support area has failed to hold. Similarly, if the index remains trapped below 175,000 and continues to form lower highs, the consolidation could extend further. The RSI divergences may also fail if selling pressure accelerates and price continues to make fresh lows. The bullish ABCD projection toward 234,000 should therefore remain conditional on the market respecting support and confirming a recovery. 10. KEY LEVELS TO WATCH ABCD Pattern Point A: 101,598 Point B: 191,132 Point C: 144,119 Projected Point D: 234,000 Current Consolidation Range Lower boundary: 160,000 Upper boundary: 175,000 Monthly LIP Support Support zone: 157,040–158,100 Monthly Volume Current volume: 2.65 billion shares Threshold: 3.85 billion shares Remaining trading days at the time of analysis: 4 Daily RSI RSI: 38.49 RSI moving average: 36.30 Historical References March 2020 market bottom. January 2009 market low. June 2006 LIP example: 8,731. August 2011 LIP example: 10,982. December 2016 LIP example: 31,764. 11. FINAL OUTLOOK: IS THE MARKET BOTTOM NEAR? The KSE-100 Index may be approaching an important bottoming phase. The larger ABCD structure, daily bullish RSI divergence, potential monthly hidden bullish divergence, monthly volume contraction, monthly LIP support, and Chaikin bullish divergence collectively provide reasons to monitor the possibility of a major recovery. The most important support zone is 157,040–158,100, while the index's current consolidation range remains 160,000–175,000. A sustained breakout above 175,000 would strengthen the recovery scenario. If the broader bullish structure is confirmed, the ABCD pattern projects a potential Point D at 234,000. However, the bottom is not confirmed yet. A breakdown below the monthly LIP support zone would weaken the bullish case. For investors who are holding positions purchased at higher levels, patience and disciplined risk management remain important. A market rebound may provide opportunities to reassess positions, but no recovery or safe exit can be guaranteed, and individual stocks may behave differently from the index. My view: The current market weakness may be nearing exhaustion, and the coming price action around the monthly LIP zone and the 160,000–175,000 range will be critical in determining whether the next major rally is beginning. AlphaEdge_Trading | Trade the structure, respect the levels, and let price confirm the next move. Disclaimer: This analysis is based on the chart observations and technical levels described above. The projected bottom and Point D at 234,000 are scenarios, not guaranteed outcomes. This post is for educational and informational purposes only and is not a promise of market recovery or personalized investment advice.