Buyers did it again, traders were lured into a short position after a very handsome bearish pattern. This pattern was head and shoulders and was being drawn for the vast majority of the previous week. Formation ended with a breakout of the neckline, which in theory, gave a sell signal on both: DAX and SP500. Surprisingly (or not), Friday brought us a sharp reversal, which left sellers on loss and facing a bigger rise, which is pretty common after a false sell signal.
On Dax, sellers gave up on Friday morning, when the price met a crucial horizontal support coming from the end of June and the beginning of July. Price went significantly higher denying the head and shoulders pattern and giving us a flag formation. This is important as a flag formation actually gives us a proper buy signal. The sentiment here is definitely positive.
Pretty much same thing is happening on SP500, so you can copy-paste the paragraph above. Maybe the flag from DAX is a wedge on SP500 but the outcome and the sentiment are the same. New mid-term highs are on the eyesight.
Let’s close this analysis with the USDCAD, where the price is drawing a bigger head and shoulders pattern, which has a potential to end the bullish correction started in June. As for the neckline, we are talking here about the 1.348. Breakout of this support will lead the price towards the one on 1.333 which looks pretty important here.
The first Monday in July started off positively with indices heading higher. This could have been triggered by traders’ good mood following the US Independence Day, or optimism over the COVID pandemic, perhaps it’s the freshly printed US dollars from the Federal Reserve, flooding the market. Instead of focusing on what has happened, let’s focus on what will probably happen next.
Let’s start with the SP500, on Monday it broke a crucial mid-term resistance on the 3155 point. This resistance has held its own since mid-June, buyers tried to break it a few times but failed, which makes it a significant level. This area was broken during the Asian session and the price remained above it during the European and American hours. The SP500 tested the broken resistance as a close support during the beginning of the European session on Tuesday. It’s crucial to hold the price above this support level to get a mid-term buy signal. Otherwise, we may experience a false bullish breakout pattern, which may be pretty unpleasant for demand.
Moving on the NZDUSD, the price of the pair is currently correcting the bullish movement that happened after the defense of the 0.639 support level and the breakout of the dynamic down trendline. Here, the price is also testing the broken horizontal resistance as a close support, which can work out for sellers.
Meanwhile the NZDCAD’s price is bouncing from the major down trendline on the weekly chart. As long as the price stays below the trendline, sentiment is negative. More will be revealed on Friday when we can view the shape of the weekly candle. Anything with a bearish body, will be considered a sell signal.
In today’s analysis we will focus on the currencies from antipodes. We will give a break to the index traders as summer holidays combined with Independence Day in the United States can result in very low volatility and overall a boring session on the global indices. Recent optimism and relatively good situation in China are definitely helping the AUD and NZD. Thanks to that, we do have very interesting setups on the pairs with those currencies.
Let’s start with the Kiwi, NZDUSD. The pair escaped from the triangle pattern with the bullish breakout off its upper line. That gave us a mid-term buy signal. Now, the pair has to confirm this sentiment by breaking the horizontal resistance on the 0.653. The sentiment here is positive.
Taking a look at the Aussie, AUDUSD, the price is still inside of the symmetric triangle pattern. Friday brings us another bullish attempt and it looks like the resistance will be finally broken. Pressure from the buyers looks serious and the chances that they will succeed are quite high.
On the AUDJPY, the breakout of the resistance already happened, so the buy signal here is already up and running. As long as the price stays above the upper line of this formation, the sentiment is positive.
July brings us optimism on the market, which was pretty much expected after what happened on the global stocks at the end of June. Fundamentally there is not much to be happy about. The pandemic is still far from being controlled and we are drowning in debt. Rises on the market are driven mostly by freshly printed money and maybe partly by the hopes that even when the second wave will happen, governments will not impose another strict lockdown.
As expected in the past few days, SP500 is heading higher. There was a false bearish breakout from the symmetric triangle which led to a rise and a bullish breakout from the pattern. As long as the price stays above the upper line of this formation, the sentiment is positive.
A few days ago, we also mentioned EURUSD and we said that it looks like the price is ending a bearish correction and is getting ready for another bullish wave. Call us not surprised, when indeed EURUSD defended the 1.12 support and later broke the upper line of the flag. Price closing a day above the upper line of the flag will be an invitation to a new bullish wave.
Yesterday we analyzed the USDJPY, where we mentioned 107.55 as a crucial support. We focused more on the breakout though and that is exactly what happened, the price went below this area. From the recent price movements, you see that the 107.55 is important as currently, we are testing this level as resistance and traders are pretty accurate with it. As long as we stay below, the sentiment is negative.
Another bearish chance for a bigger drop has been wasted. Yesterday, sellers were hoping for a bigger slide on global indices, coming from the bearish breakout from the good-looking symmetric triangle pattern. Hopes faded at the end of the European session and the beginning of the American one, when the DAX and SP500 surged back inside the triangle. In theory, that leaves us with a false bearish breakout, which is usually considered a strong signal in the opposite direction, so in our case – north.
Let’s start with the SP500. You can clearly see the false breakout here and then a nice pullback above the lower line of the triangle. The European session however, didn’t start well and it’s negatively affecting futures on the SP500. The price is correcting the bullish movement from yesterday and is testing the lower line of the triangle again but this time from above. Long story short, as long as the price stays above the lower line of the triangle, sentiment is positive.
Short update about the EURUSD, which is currently forming a flag formation. The flag is a trend continuation pattern, which in this case promotes further rise. In the past few days, the price was making higher lows, supported by the blue up trendline. This may indicate a willingness for a bigger upswing. In the mid-term, as long as the price stays inside the flag, buyers can still have hope for a bigger upswing.
When mentioning the Euro, we have to talk about the EURCAD, which is ahead of a bigger movement. The thing is we don’t know the direction yet. After the flag patten, the price created a rectangle formation. So, simply speaking, the price is currently in a tight range. The way price action enthusiast trade this is by buying when the price breaks the upper line of this pattern and selling when the price breaks its lower line.
In our analysis on Friday we mentioned an interesting symmetric triangle pattern that emerged on the charts of both the DAX and the SP500. Back then, we were inside of those patterns, waiting for a breakout, which in theory was about to show us a proper direction. The breakouts did happen and, in both cases, were to the downside, which is rather negative information for stock traders.
Let’s start with the DAX, which indeed broke the lower line of the tringle on Friday but it did not cause a huge reversal on Monday. Actually, we are starting the new week positively and the price is trying to move a little higher however, I wouldn’t get too optimistic. From a technical point of view this is no more than a broken support being tested as a closest resistance. As long as the price stays below the resistance, sentiment is negative. Only a comeback to the inside of the triangle would be a strong buy signal.
The same thing is happening on the SP500 but let’s say that buyers are less enthusiastic about this rise. Well, maybe it’s because Americans are still asleep. Nevertheless, as long as the price stays below the lower line of the triangle, sentiment is negative.
About the triangle, I would like to show you the CADCHF pair. On the pair’s chart you can see how reliable the triangles are. In February, we had a breakout to the downside, followed by a huge slide. Then a correction (flag), which ended on two important Fibonacci resistances. In the middle of June, the price broke the lower line of the flag, which reopened a sell signal for us, that sell signal had originated when breaking from the triangle mentioned above. Sentiment here is negative.
Perhaps this wasn’t the best week for global indices, but it also wasn’t the worst; especially after the bearish gap at Monday’s opening. Here we are in the last trading day of this week and after some ups and downs, buyers are fighting for the bullish body of the weekly candle, and quite frankly they could be successful. That being said, let’s take a look into the future and try to anticipate the market’s next moves.
For the last couple of days, I was focusing on range trading of major indices, today we’ll go beyond the hourly chart and look at a bigger formation than the latest rectangle; today we’ll look at the symmetric triangle pattern. The price of the SP500 is exactly in the middle of this formation, so there’s an equal chance that the price may move up or move down. What do price action traders do in this case? They wait. A breakout of the upper line will give us a buy signal while a breakout of the lower line will give us a sell signal.
The DAX is in the same pattern, which is slightly less handsome as it’s American counterpart. The mechanics of this formation however, are the same. A breakout of the resistance level would give us a buy signal while a breakout of the support level would give us a sell signal.
Lastly, let’s quickly look at Brent Crude Oil. The rally stretched out and currently the price is creating a head and shoulders pattern. Sellers had a chance to break the neckline and the uptrend line but they failed. But there’s still a chance that buyers will succeed. If the price closes below the combination of these two supports, it would be a strong sell signal.
Oh boy! Buyers could be facing a big problem here; Monday started with huge pessimism which was perfectly reflected in the bearish gap on major indices. This however, didn’t spook out buyers, they simply started taking advantage of the lower prices and buying. General market optimism only lasted till today’s morning. Currently we can see a lot of negativity returning to the charts.
Let’s start with the DAX which has been one or our frequent targets. Yesterday we mentioned a false bearish breakout and we anticipated that a nice swing would follow. Now, we need to be fair to sellers as Tuesday brought us a false bullish breakout. Today, the price is back below the crucial support level, which brings the DAX back into negative sentiment.
SP500 traders were more cautious, the price didn’t break the upper line of the range, so technically we didn’t get a buy signal. Without a signal there’s no trap. The SPX bounced from the upper line of the range creating a head and shoulders pattern. Based on everything we’ve mentioned, a movement towards the 3075 points seems inevitable.
When stocks are pessimistic gold is optimistic. We also anticipated this scenario in previous analyses; that a breakout of the 1740 USD/oz will give a buy signal and it did. The price is now pushing higher and has reached its highest level since 2012 … not bad.
Tuesday brings us pretty solid PMI numbers from Europe. This is definitely supporting buyers and is actually serving as an ignition point for a new bullish wave for the global stocks. We’re not surprised as we predicted this probability in yesterday’s analyses.
Let’s start with the DAX which is pushing forward after a false bearish breakout from the first trading day of this week. The decisive rise during the European morning broke the upper line of the range. That finished the correction and in theory, opened the doors for an attack on mid-term highs. Sentiment is definitely positive.
Next the EURUSD, which we also analyzed yesterday. We said that the head and shoulders pattern is off the table with the entrance of the wedge. Once again, we’re not surprised, when yesterday evening the price broke the upper line of the wedge and went higher triggering a buy signal. Sentiment for the pair is positive.
Lastly a small update on Brent Oil, which is heading higher. Global demand seems to be rising and that is helping the price of the crude Oil. Tuesday brings us a breakout of the 42.8 USD/bbl. and new highs in June. As long as the price stays above the long-term up-trendline, sentiment is positive.
Monday morning was the same as Friday night for global indices; we saw a visible risk aversion. Fundamental triggers pointed us into that direction, rising COVID-19 cases around the world and most noticeably Apple’s announcement that it would be shutting down some shops which have been strongly affected by the crisis. Otherwise, a bearish opening for the markets on Monday morning did not spook investors. Instead, traders rushed to buy, supported by lower and more attractive prices.
The DAX created a bearish gap in today’s market open, which allowed the price to break the rectangle pattern. The first movement to close the gap, which has been anticipated by buyers, went as far as pulling the price much higher. The movement created a false bearish breakout, which is generally viewed as a sweet buying opportunity. Despite turbulences, sentiment is once again positive.
Gold has been locked in a long-term sideways trend in between the 1740 USD/ oz resistance and 1670 USD/ oz support. The strong Friday market close, and initial risk aversion on Monday morning allowed the price to break the upper line of the range. The price is still relatively firm and stayed above the resistance level. Gold buyers have outperformed DAX sellers. As long as the price stays above the 1740 USD/ oz support, sentiment will remain positive.
Lastly let’s take a look at the EURUSD, which has been drawing a head and shoulders pattern for the last couple of days. The price was right above the neckline, waiting for a proper breakout, but the bearish potential blurred out the breakout and it didn’t happen. Instead the head and shoulders pattern eventually got a wedge, which promotes an upswing. If the price breaks the upper level of this pattern, we’ll have a buy signal.
The market has cooled off in the last few days; there aren’t any major movements and most of the instruments have been locked in a mid-term sideways trend. While this may sound boring, it’s a great base for building anticipation for the big movements to follow. Trend followers can have a short break for now but they will soon be very busy again.
The first hero of the day is the DAX which has been in a sideways trend since Tuesday. The lower line of the range is the neckline of the double bottom formation, which cancelled its bearish correction on Monday. Today, the price is trying to test the resistance again. Based on the current sentiment and the central bank’s money printing, the price should break the resistance and set new mid-term highs.
Moving on to Gold, a major commodity for FX traders that’s also stuck in a sideways trend since before Tuesday. The price has stayed between the 1670 and 1740 USD/oz level since the beginning of April, only seeing a small break when there was a false bullish breakout mid-May. As long as the price stays in the sideways trend no major movements are expected. Only when the price breaks out of the 1740 level, we would have a proper buy signal. If the price breaks out of the 1670 level, we’ll have a sell signal.
Lastly, we’ll look at the EURUSD which has been consistently dropping. We recently looked at the pair and said that the price is drawing a head and shoulders pattern, now the EURUSD is finishing the right shoulder. Technically we don’t have a legitimate sell signal yet since the price hasn’t broken the neckline. It’s good to note that it’s always better for price action if the neckline is inclined rather than declined, as it currently is with the EURUSD. Sentiment is leaning more towards negative, and it’s slightly more probably that the price will test the 1.1 support level, so we expect a further slide.
Today, in our analysis we’ll look at one of the most popular commodities – Oil, one of the most popular indices – SP500 and the most popular currency pair – the EURUSD. This will be a short market video packed with stars and interesting trading opportunities.
Let’s start with Brent Oil, which is back to a bullish mode after last week’s correction. The correction was very technical. We had a wedge, which ended on the 23,6% Fibonacci. Very well played by traders. We finally have some sanity around this commodity.
Last week, the SP500 gave hope for sellers and then entirely took it away on Monday. After retracing the 23,6% Fibonacci, the price created a double bottom formation, which officially ended the bearish dream. With the current price action, new mid-term highs seem inevitable.
A handsome Head and Shoulders pattern can be seen on the EURUSD chart. This may end the bullish trend started by the breakout of the upper line of the symmetric triangle in the middle of May. Okay, maybe won’t end it but at least pause it. As long as the price stays at the 1.1 level the sentiment is positive.
The new week begins with a complete risk-off mode in the market. Stock bears have finally caught their breath and their short positions are no longer negative. What’s the reason behind this sharp reversal? It may be the last week’s Federal Open Market Committee (FOMC) meeting. It could also be growing fears about a new COVID wave in China, or it may be the fear of a bursting bubble as 10-year-olds become day traders on the Robin Hood app. There are always factors behind every movement.
But in our analysis the focus isn’t about analyzing the ‘why’ instead we focus on analyzing the ‘what’, as in, what’s happening to the price and where is it heading.
So, with the ‘what’ in mind, let’s take a look at the DAX which started to drop with a head and shoulders pattern. The broken neckline gave the green light for the drop while the broken mid-term up trendline increased the bearish momentum. From that, we can see that 23.6% of the post-corona-reversal has been retraced. In my opinion, as long as the price stays above the 38.2% Fibonacci level, sentiment is bullish. What about a breakout? Well, that can get ugly.
The NZDUSD, which we mentioned last week, referring to its weekly chart, was creating a shooting star on the long-term down trendline. The shooting star pattern developed into a slightly bigger, but also bearish candlestick pattern. The price did indeed bounce from the downtrend line, giving us a very handsome sell signal.
Today we’re finishing up with an update on the EURCAD, which we mentioned at the beginning of June. We’d said that the 1.505 support level looked strong and should help buyers initiate a proper upswing, breaking the upper line of the flag. That’s why I’m not surprised by the fact that the price did exactly that! As long as the price stays above the upper line of the flag, sentiment remains positive.
Tuesday brought us a bearish correction and Wednesday brings us its continuation. Traders have started positioning themselves ahead of today’s Federal Open Markets Committee (FOMC) meeting. The correction is pretty small and largely controlled, so it looks like investors don’t want to abandon stocks ahead of the FED meeting. They’re most likely avoiding missing another bazooka or additional helicopter money from the Federal Reserve. In any case, this evening will be very exciting.
Ahead of this meeting the SP500 is finishing a head and shoulder formation. The right shoulder is already formed and in theory, we should see a breakout of the neckline. The problem for sellers is that buyers bounced from the neckline with a very handsome hammer candlestick. For many price action traders, this means a denial of the head and shoulder and an interesting buy signal.
The SP500’s German peer, the DAX is in a very similar situation but in this case, the neckline was broken. Is this breakout giving us a sell signal? If yes then not a very convincing one as the hammer is also present here. In addition, the price is still above the major up trendline. Actually, sellers did not have enough strength to even test this line as a support. Sentiment ahead of the FED meeting still looks positive.
The last asset is the EURUSD, which finished a bearish correction yesterday and got another buy signal. For three days, the price was inside of the wedge pattern and yesterday broke its upper line. In addition, the price also bounced from the mid-term up trendline. Hours before the FOMC, sentiment is positive.
It seems that Tuesday is a correction day. Indices are giving up Monday gains, safe havens are climbing higher and Oil is declining towards the mid-term up trendline. This is perfectly normal and should not ring any bells, at least for now. Today, we will focus on the currency market only. We can see few setups worth your precious 5 minutes.
We start with the NZDUSD, where in the past few weeks, the price was climbing up like crazy. The upswing stopped this week and the place, where it happened was totally not random. NZDUSD is bouncing from the crucial long-term down trendline. Also, they don’t do it just like that but by creating a great looking shooting star candlestick formation. As long, as we stay below the top of this candle, the sentiment is negative.
Small update about the EURPLN, where the price is currently finishing the right shoulder of the inverse head and shoulders pattern. It is all happening on the 4,4, so absolutely crucial support. As long as we stay above, the sentiment is positive. For the legitimate buy signal, we need to see the breakout of the neckline first.
We will finish with the Swiss Franc index, which we mentioned yesterday. The price was sharply going lower but we said, that the reversal is very probable, due to the combination of a dynamic and a horizontal support. CHF Index shows us today that we were right. Price perfectly bounces from those supports and climbs higher. That is an interesting short-term buying opportunity.
New week starts without any excessive fireworks. Risk ON mode continues, so safe havens are trading lower and global indices are flirting with the new mid-term highs. Optimism can be widely seen across the globe. If we could name a one reason why it is all happening, we would say: NFP. The Friday’s number shocked and probably killed all the remaining bears (if they were still any left).
SP500 starts this week on the front foot. We have a small sideways movement but it should not concern the buyers. Bears probably can see a head and shoulders pattern here but we had so many of them on this chart that I guess, that no one believes in them anymore. In general, they are great, trustworthy formations but in order to trade them, one should wait for the breakout of the neckline, which was not happening here.
Quick update about the EURCAD, which we mentioned few days ago. We were above crucial support on the 1.505 and we said, that from this point, the upswing should start. It did but unfortunately it did not last long. Buyers managed only to test the upper line of the flag and that was it. Currently, the price is about to test the 1.505 again and for the range traders, this can be an interesting mid-term buying opportunity, again.
Interesting situation can be seen on our very own Swiss Franc index, which perfectly shows you the sentiment towards the CHF. Last few weeks are terrible but it seems that Franc has found a place to rest. This is the long-term up trendline connecting higher lows since the April 2019. We have also one horizontal support, which worked for some time but was eventually broken on Friday. Comeback above the orange area can be an interesting buying opportunity.
New day and new highs on the major indices. Its not a big deal I guess, we managed to get used to that. Yesterday, indices got additional boost from the ECB, today, traders have all their hope in NFP. These are the new triggers as we all know about the old ones: basically, unlimited money supply from major central banks all over the globe.
Yesterday, in our analysis we mentioned DAX. The bearish correction ended a little bit faster than we all thought. ECB came with help, not that buyers needed it but nevertheless, it allowed to pump the prices higher. Crucial level for DAX right now is 12555 points and this is a closest support. As long, as the price stays above the short and mid-term sentiments are positive.
SP500 is having a very similar situation. Here, the crucial level is 3130 points but absolutely most important line for the mid-term situation here is the mid-term up trendline connecting higher lows since the middle of May. As long as we stay above, the sentiment is positive.
We will finish with an update on the EURPLN, which found this crucial support on the 4,4. Weekly candle is a hammer, which promotes an upswing but when we will look a bit closer into this formation, we will see an inverse head and shoulder pattern. The price is testing the neckline as we speak. The breakout will give us a proper mid-term buy signal.
Market optimism can be seen all over the place. First of all, we have an impressive surge on stocks. Is there still anyone that thinks that we should get another leg down and that we didn’t just experience the V shape recovery (on graphs, not the economy)? Those riskier instruments like emerging markets currencies are also gaining a bit of traction. Let me show you three, potentially very promising trading ideas.
The first one is gold, where the price is going lower after a false breakout at the 1740 USD/oz resistance level. This week the price tested that area again and again, but were sellers victorious? The price is currently hitting lower lows and highs and as long as that continues, the short-term sentiment is negative.
Stocks are currently taking a small break too. Over the last three days on the DAX did really great. The price managed to climb significantly higher crashing all bearish dreams – if any were still left. Currently, we do have a small bearish correction but it looks just like a correction. In the recent upswing we already had two of them, very similar to each other. This one should end, when the price breaks the upper red line. In my opinion, there is no ‘if’ here, just ‘when’.
The EURPLN is a great example of a better sentiment towards emerging markets currencies. Maybe not this week but the previous two weeks for sure. The price ended the sideways trend that we had since the middle of March and went lower. Currently we do have a great looking hammer candle, which is promoting a further upswing. The place in which this formation is present is not random. The price is bouncing from the highs of 2018 and 2019. We already mentioned that this area can be a great bearish target and support. As it turns out, we were not mistaken.
Are there still any bears on the market? Will, we will give them some rest and time to reflect on the decisions they made in the past few weeks. In our videos, we warned them many times not to go against the FED. We said that they should not seek for logic or sense out there. Trading these days is crazy and we just have to adjust to the fact that markets and the strict macroeconomic approach are broken.
In today’s analysis, we will focus on the Euro, where traders have been enjoying a flawless upswing.
On the weekly chart the EURJPY created a double bottom formation, which looks very promising for long-term buyers. One long-term down trendline was already broken and currently buyers are aiming for a second one. Before they get there, they’ll have to break the horizontal resistance at the 38,2% level, which has been extremely powerful so far. Powerful enough to initiate a bearish reversal, or at least a small correction.
Next is the EURCAD, where the price is inside a long-term flag formation. It seems like that flag is coming to an end as the price doesn’t want to go lower than 1.505, which is currently a crucial support. As long, as the price stays above this area, the sentiment is positive and traders can think about a great risk to reward ratio.
We’ll end this with the EURCHF, which has been enjoying three great weeks. The price broke two crucial down trendlines and is currently aiming at a strong horizontal resistance, created by two Fibonacci levels: 23,6% and 38,2%. Furthermore, this area is strengthened by 2019 lows, so it seems like a great occasion to take profit action, for some at least.
In today’s analysis, we will focus on commodities: Gold and Oil. In the previous months, Gold was climbing has been mostly moving higher and oil has been declining. Despite the most recent rise in the price of Brent and a small decline in the price of gold, we think that we are about to see a comeback to the dominant trend. In both cases, gold has a nice bullish signal and oil is drawing rather bearish pattern.
First, lest start with Brent Oil, where its price has doubled since the end of April. In the last two weeks, the upswing stopped and the price is creating a head and shoulders pattern. The price is creating the right shoulder of the pattern. The main up trendline was already broken but the neckline is still intact. In this case, the price breaking the neckline can be a nice selling opportunity.
The second instrument is Gold, where the price is currently breaking the upper line of the flag formation. The flag was a correction in the bullish trend, so it promotes another wave up. The real, legitimate buy signal will be triggered, when the price will break the horizontal resistance at 1735 USD/oz.
The last instrument is not a commodity but the USDJPY pair which is definitely worth mentioning. This Friday is crucial for this pair as the price has managed to escape from the recent sideways trend. Sellers broke two up trendlines and the lower line of the rectangle pattern. Currently, we are testing this last support as a resistance. The test so far is positive for sellers, which may indicate a willingness for a further slide. Sentiment here is negative.