Last Few Great Setups Before Easter!

With so many events ahead, today should be an interesting day. The OPEC meeting leads the day, in addition to Job data from the US and Canada and the upcoming Easter weekend which means many markets will be closing on Friday and Monday. Mid-term traders will likely keep their positions opened throughout the long weekend, which increases their risk in an already risky industry. Sit tight and get ready for today’s analysis.

Let’s start with the commodity which is most at risk of being affected from the OPEC meeting; oil. The price is fairly stable and the recent upswing created the right shoulder of the inverse head and shoulders pattern. This can be a good move for buyers. How can the OPEC meeting affect oil prices? If we hear promising news then the price of oil will have better chances of breaking the 28 USD/oz resistance level which would indicate a buy signal.

Moving on to the DAX, where the relief rally has continued. In yesterday’s session the index averted a head and shoulders pattern, but in today’s the price bounced from Tuesday’s highs. The current formation could be one of two; an ascending triangle promoting the breakout to the upside or a double top formation promoting a reversal. What’s next? A breakout of the horizontal resistance would give us a buy signal while a breakout of the dynamic support would give a sell signal.

Now let’s get back to the EURGBP which we recently mentioned. The last time we spoke about the pair it was going through four trend continuation patterns in a row. The last one, which was a wedge, was eventually prolonged and ended in a pennant – which is a sell signal. After the pennant, we now have another flag, which also promotes a breakout to the downside. This chart is a perfect example of how effective the trend continuation pattern can be.

In today’s session, we’re discussing a fourth instrument and that’s because there’s a small but important update on gold. In yesterday’s analysis we mentioned that gold was on a combination of crucial horizontal and dynamic support levels. In most cases when those two meet we see a bounce. This was no exception, the price of gold used those two supports and is now moving upwards.

That Can Be a Very Important Day for Global Indices!

Indices performed greatly in yesterday’s trading session but as the day progressed, traders gave up on earlier gains, this can potentially be a negative sign making this session a very significant one.

The DAX bounced from the upper line of the wedge that we mentioned in yesterday’s technical analysis. The bounce wasn’t random, it’s shaped like a head and shoulders pattern which is an obvious sign for a potential reversal. The neckline is on the 38,2% Fibonacci level, so the crucial resistance level became a crucial support level. The price dropping below the 38,2% Fibonacci level would be a negative sign.

Gold is locked inside a wedge pattern, this formation promotes a breakout to the upside, which is good for buyers. Furthermore, the XAUUSD rose above two major support levels; the first is horizontal, approximately on the 1640 USD/oz and the second one is dynamic and a mid-term up trendline. If the price stays above these two supports, we can expect an upward movement.

The GPBJPY moved very similarly to major indices, seeing a crash followed by a correction shaped like a flag. The SP500 went through the same movement. For the index, the price tried to break the 50% Fibonacci retracement level but failed, creating a false breakout. Now the price is on the lower line of the flag, if it closes the day below the line, it will be a strong signal to go short.

Major Indices Crash 38,2% Fibonacci

What a Monday we’ve had, traders seem to have responded well to unlimited money supplies from the Central Banks and the introduction of new stimulus. This comes at the heel of optimism over the spread of the coronavirus in Europe, where the curve continues flattening, indicating the worse may be behind us. This is great news for the world but also a good sign for buyers.

While the future remains uncertain and there are talks of unemployment reaching an average of 30%, at this point it seems traders aren’t worried, as long as they have cheaper stocks to trade on and that’s why today’s focus will be on indices.

Let’s start with the DAX, the index managed to finally destroy the 38,2% Fibonacci level. The price seems to be on the right track to cover the gap formed in the beginning of March. First it must break two important resistances; the first one is the upper line of the wedge and the second is the 50% Fibonacci level.

The wedge tends to be a trend continuation pattern so a downward movement is still likely, mid-term buyers however, can still enjoy trading the rise of the index.

We’re moving on to the Down Jones which was yesterday’s index of focus. The inverse head and shoulders pattern has worked allowing the price to test the 38,2% Fibonacci level and then break it. The next Fibonacci resistances however, are not so promising. Recent price movements have touched the 23500 and the 24900 resistance levels.

The SP500 is in a similar situation; the price has easily surpassed the 38,2% Fibonacci level. Now the price is challenging the local resistance level of 2700, which looks promising for sellers. In my opinion the crucial resistance for the SP500 is the 2880 level, where we will have the upper line of the flag. This is also a trend continuation pattern.

Three Great Trading Opportunities: DJIA, Gold And EUR/GBP For The Beginning Of The Week

This week has begun with plenty of optimism across the markets. The coronavirus curve is starting to flat out across Europe with many countries which were hit the hardest reporting lower cases and deaths over the past few days. This has driven many markets to surge, shedding some light at the end of the tunnel.

Let’s start with the Dow Jones which opened this week with a bullish gap, followed by an upswing which left the gap opened. From a technical point of view the DJA created an inverse head and shoulders pattern on the 23,6% Fibonacci retracement level. During the first few hours of trading on Sunday, the price managed to break the neckline and that’s a buy signal. The next target for this movement is for the price to hit the 38,2% Fibonacci level, in my opinion, as long as the price remains below that crucial resistance level, the mid to long-term sentiment remains negative despite this short-term surge.

Gold also started the week with a quick rise, this move is mostly attributed to a weaker USD. The crucial development for Gold is still last week’s comeback to above 1600 USD/oz, which killed the mood for a bearish correction. As long as the price remains above 1600 USD/oz, sentiment for the precious metal will remain positive.

The last instrument on today’s agenda is the EURGBP. Here we saw a very interesting technical situation which emerged after the price broke the psychological support level at 0.9. During its steady downtrend the price created four beautiful trend continuation patters; two flags and two wedges. The last wedge ended right on the long-term downtrend line. The price has already broken the lower neckline of the pattern and that’s a very good sell signal.

Friday Setups: Oil, AUD/NZD and Dollar Index

Today let’s start our analysis with an update from Poland; The number one spot on the stock exchange is now occupied by a gaming company called CD Project. You probably recognize some of the games they’ve released like ‘The Witcher’ and ‘Cyberpunk2077’. It’s interesting to see that in these times, usual conglomerates such as Orlen, an oil & gas company or KGHM, one of the biggest copper and silver producers in the world are no longer helming the stock exchange.

Back to our usual assets, oil surged yesterday after U.S. president Donald Trump commented that an agreement between Saudi Arabia and Russia may happen. This is in line with the technical situation; as we mentioned yesterday, the price was above the 21.1 USD/bbl. level, so there’s a good chance for a short-term upswing. What will happen now is based on speculation, but keep in mind, traders just bought the rumor, so we can base our next moves on what we think they will do with the facts.

Next, we’re moving onto a rather unusual pair for our analysis, the AUDNZD. The pair has shown an interesting setup on the weekly chart, where the price is currently creating a shooting star. The place of this candle is not random; after an earlier test, the price created this candle under two important resistances – the dynamic and the horizontal one. Based on all the above, the pair is looking at a long-term negative sentiment.

Lastly let’s take a look at the Dollar Index; it has shown us that appetite for the USD is back. The price used the inverse head and shoulders patter to come back above the 38,2% Fibonacci retracement level. Buyers are not stopping and it seems that they are aiming to hit the 23,6% Fibonacci level. Based on the current momentum, they should hit it soon.

Sweet Movements on Major Commodities: Oil and Gold

The new week has brough a decline for major indices with interesting movements in the commodities sector. This has happened in the absence of higher volatility by the USD, which usually has a significant impact on commodity prices. The USD has been locked in a sideways trend for the past couple of days and we are expecting a bigger movement to come about.

Crude Oil 1 hour chart

Let’s start with oil which may be returning from a long downward journey. The price of oil flirted with the 19 USD/bbl. level for the first three days of this week, turning it into a support level as the price jumped higher. Price action traders can easily spot a crucial resistance level at around 21.1 USD/oz, a level which was broken today and is now being tested as a support level. If the price closes today above that line it can be a good short-term buying opportunity.

Gold 1 hour chart

Meanwhile, gold has found a new resistance. The wedge from the end of March has failed and instead of breaking the upper line, the price fell. Sellers have managed to break the psychological barrier of 1600 USD/oz, which is currently the closest level to resistance. The latest attempt to break that level failed and the price created a nice shooting star on the hourly chart. That does not indicate optimism for buyers.

S&P 500 1 hour chart

Lastly, let’s take a quick look at indices which seem to have remained under the influence of the bounce from the 38,2% Fibonacci retracement level. We can also see a sweet head and shoulders patters with a neckline, which has already been broken. Yesterday we mentioned that after a breakout of the neckline, a new resistance is likely to be tested, so we warned traders of a temporary pullback and this is exactly what’s happening now. Indices prices are moving significantly higher following contact with the 23,6% Fibonacci level. However, it’s not time to get too optimistic, the long-term sentiment remains negative.

38,2% Fibonacci – That Is the Most Important Resistance on The Market Right Now

Following last night’s overall improvement in prices on a technical basis, our focus today will be on indices. Major indices in the US and Germany managed to bounce from the 38,2% Fibonacci level which is currently considered a crucial resistance level and a major level in the coronacrash rebound.

Let’s start with the Dow Jones which managed to create the head and shoulders pattern after breaking the lower line of the wedge – remember this pattern is considered a bearish indicator. The price has already broken the neckline, which indicates that the sell signal is probably already active. Necklines like to be tested as resistances soon after a breakout, so watch out for a temporary bullish bounce.

The SP500 is in more or less the same situation. The details will determine whether the latest price movements are forming a head and shoulders patter or a double top formation, and this can be interpreted either way by you. The neckline was also broken and the sell signal is also active. The negative sentiment will remain as long as the price stays below the significant 38,2% Fibonacci retracement level.

The DAX is holding up a bit better than its American competitors. Optimists will probably interpret the sideways trend as a consolidation. I see it as a head and shoulders patter which has not broken the neckline yet. As long as the price stays above 9400, buyers can still hold on to hope. However, it’s hard to imagine that Germans will manage to keep the price up while markets on the other side of the pond continue falling.

Polish Zloty Under The Pressure Again?

Today we have an unusual situation on our hands; we’ll be taking a closer at two exotic pairs which have made an impact in the market. Exotic instruments are not often highlighted, but this doesn’t mean they can’t offer great trading opportunities. Let’s get to it.

First, we’ve got the EURPLN which has made a few appearances in our market analysis sessions. Towards the end of February, we were bullish about this pair when the price was finishing the inverse head and shoulders pattern. The price indeed climbed significantly higher breaking all crucial horizontal resistance levels. It more recently bounced from its resistance level turning it into a support level (4.5).

The price had a chance to create a head and shoulders pattern but failed to break the neckline and instead played the triangle scenario and broke the upper line of this formation. Today the pair saw an upswing giving a new buy signal and headed into a positive sentiment.

The next pair is the USDPLN which has also been on the rise the past few weeks. Over the last few days, we saw a correction but now it seems that the correct has ended, that’s because we see a significant bounce on the 38,2% Fibonacci retracement level which was made with a small inverse head and shoulders pattern. As long as the price stays above the neckline and the 38,2% Fibo level, the sentiment will remain positive.

Let’s end this with a quick overview of the SP500; the index once again moved up to test the 38,3% Fibonacci level following a small bullish flag. It’s expected to play the role of a strong resistance again, at which point it can be a good occasion to open new short positions. If the resistance is broken and the bulls manage to get it to close the day above 2640 points, we’ll get a crucial mid-term buy signal.

Oil Crashes Again. Gold Is Ready For New Highs

As the last week of March begins, we can see the risk-off sentiment return to the market. This Monday appears especially difficult for oil bulls; after the weekend the price opened with a bearish gap dropping below the 20 USD/bbl level. The price slid under the horizontal support level of 20.6 USD/ bbl and turned it into a new resistance level. In addition, oil remains under pressure as quarantine regulations are extended in several countries which will decrease the already low demand for oil.

In other commodity news, gold is under a brighter light with positive sentiment. Last week we mentioned the triangle pattern, which as anticipated, resulted in an upside breakout. After the triangle we saw a wedge pattern, which means a trend continuation and that signifies a potential upside breakout.

Now moving on to indices; the DAX closed last week with a small drop after the price tested the 38,2% Fibonacci retracement level. After a second test, the price drop accelerated breaking the lower line of the pennant formation. Fast forward to Monday, the DAX opened with a bearish gap followed by a quick rise which aimed to close the gap.

Sentiment for the index appears negative. For now, the price is drawing the right shoulder of the head and shoulders pattern. Considering it’s at the top of a bullish correction and is bouncing from the 38,2% Fibonacci retracement level, it’s reasonable to be bearish. A proper sell signal will be triggered, when the price breaks the red neckline.

Falling Knife Catchers Are About to Learn a Lesson

Today, in our analysis, we’ll focus on the United States, where the US surpassed China in the number of total COVID-19 cases. For the past few days US indices were rather resistant to the global correction we are witnessing with indices such as the DAX falling far behind their foreign counterparts. As of yesterday, we saw a slight turn around with both the SP500 and the DOW Jones managing to catch up with the bullish race.

The DAX managed to retrace its coronacrash level of 38,2% on Wednesday while futures on the SP500 managed to do the same a few hours ago. 38,2% is considered a decent place for a comeback to the main trend. The potential for a bearish movement is even higher here, as the price bounced from the upper line of the flag formation and is creating a head and shoulders pattern. All this indicates a south-bound movement and a breakout of the lower line of the flag. The consequence could be a major sell signal.

Another one is the DOW Jones, which also stopped at the 38,2% level. In this case, instead of a flag, we have a wedge but the outcome of those two formations is the same – a trend continuation.

Since we’re covering the U.S. Market, let’s talk about the USD, where the Dollar Index managed to correct the 50% of the upswing from mid-March. Currently the price is creating a nice reversal pattern (engulfing on H4 and a hammer on D1). We can assume that we’re about to come back to the main bullish trend here.

Correction On The USD And The Influence On The Commodities.

The last few days brought us a correction on the USD. In theory, a weaker dollar should support commodities but that’s just an expected reaction which won’t necessary be applicable in these volatile times that we are living now. As if the coronacrash wasn’t enough we also have a war on the oil market which is a bearish brother-in-arms of the industry’s crippling demand. As you can see, the surroundings of the Oil Market are rather pessimistic.

The Technical situation does not look any better. The price bounced from 20 USD/bbl. and tested the 28 USD/bbl. level as a closest resistance before going into a downswing. Most recently, the price was creating a pennant and broke its lower line. That breakout is a negative factor and hints at a further slide south.

A weaker USD along with global turmoil help Gold. Technically, Gold found a local support, slightly bellow the 1600 USD/oz level and will most likely use it to make an attempt at new mid-term highs. Sentiment here is definitely positive.

Let’s also look at the SP500, where the last day brought us a decisive bearish victory. The price failed to continue a bearish attack and failed to break the 23,6% Fibo and the resistance on the 2550 points. We also managed to break the short-term up trendline coming from the latest correction. As long as we stay below the green area, the sentiment will remain negative.

So What, No Recession?

Yesterday morning, we recorded a video analysis, where we were informing you about the potential buy signal on the DAX, coming from the breakout of the neckline of the inverse head and shoulders pattern. The price broke the neckline, went higher and the DAX saw one of its best days on record. We can’t say we’re surprised.

Wednesday on the European Market started with a small pullback but I guess it’s normal after an upswing like that. The DAX is close to the 10200 points so a 38,2% Fibonacci retracement of the coronacrash. I think that they will not waste this great occasion to test this resistance. In my opinion, the future of this instrument depends on what will happen there. A strong reversal can easily end this relief rally but on the other hand, breakout should attract bulls, looking for bargains on the discounted market.

Can we spot a similar situation in the US? We most definitely can but the scale of the reversal is lower. The Dow Jones also created an inverse head and shoulders pattern and broke the neckline. The thing is that the momentum is not so significant as with its German counterpart. Americans, so far, retraced only slightly more than 23,6% of the coronacrash. A 38,2% line is still far. Nevertheless, as long as we stay above the neckline, the mid-term sentiment remains positive.

Let’s check the sentiment towards the emerging markets currencies, I will use the USDPLN as an example. We can see that sentiment here warms along with the one on the stock market. USDPLN stopped this crazy upswing on its 2016 highs. On the hourly chart, the price is creating a head and shoulders pattern and is trying to break the neckline as we speak. A successful breakout can bring us to areas around 4.12.

What a Surprise, There Are Actually Instruments Which Are Going Up: DAX, Gold and EUR/USD

Coronavirus has started showing signs of slowing down in Italy, which is giving everybody hope. On the other hand, we have new restrictions in the UK, which is still in the early stage of the epidemic. The FED tries to lift the markets again but the bazooka which they used yesterday was more like a rubber stick than a miracle weapon or maybe it is but it works with some kind of a delay. Yesterday, investors rather ignored the news from FED but Tuesday starts with optimism.

Let us show you the DAX, which is still fighting on the crucial long-term support of 8200 points and on this support, we are drawing an inverse head and shoulders pattern. We all know that this formation is a very powerful one but it gives a buy signal only after the breakout of the neckline. The thing is that the neckline is being challenged right now. A breakout can bring us optimism but the bounce and the drop will be another bearish factor and we already have quite a few of them.

Gold bounced from the crucial support level of 1450 USD/oz and yesterday broke its crucial resistance around 100 USD higher – on the 1550 USD/oz. After the breakout of that resistance, the way towards the new highs is pretty much opened and Gold is ready to shine again.

Long time no see for our old friend EURUSD. After the pair collapsed in the middle of March, now it has time for a correction. The correction is so far pretty flat but it’s shaped like an inverse head and shoulders formation, so it has potential. For the buy signal, buyers need to break the resistance slightly below the 1.08 level. If successful, the price can climb up as high as to the 38,2% Fibonacci around the 1.097 level.

New Week, New Bearish Gap

The last full week of trading in March starts with bearish gaps on major futures markets around the globe. This isn’t a surprise at all if we consider how last week ended – buyers had a chance for a reversal but failed to do so and now, they are going to pay the price for this.

Let’s start with the Dow Jones, where I would like to show you one of the most powerful price setups – a false breakout. Last week, the price was drawing a pennant, which ended with a breakout to the upside. That breakout gave us a buy signal but after making a mild upswing, buyers surrendered and the price reversed. That was a false bullish breakout. It created a situation, where buyers abandoned the sinking ship and new sellers entered the market, encouraged by the bullish catastrophe. That pushed the price lower and allowed it to set new coronacrash lows.

If you are wondering how deep we can go with this, lets take a look on the monthly chart of the SP500. The price is slowly approaching 2015 highs of 2100 points. It seems like a good target. Speaking of a good target, don’t forget the 50% retracement of the 10-year long bull market, which is slightly above the psychological level of 2000 points. I think it’s reasonable to expect that the price will get there during this bear market.

Last but not least is Oil, where traders confirmed one of the most important principles of the Price Action – broken supports are tested as new resistances. That was the case of the 28 USD/bbl. which was confirmed as a resistance on Friday. That allowed the price to fall another leg down, which is currently threatening the support on the 20 USD/bbl. It seems that the bullish nightmare isn’t over yet.

Calm After the Storm. Before Maybe Too…

Last trading day of the week is a time for a correction on almost all instruments on the market. Traders are trying to catch a breath before facing another, most probably volatile, week on the markets. Those corrections create nice opportunities for short-and midterm traders out there, but are obviously not risk-free. Going against the trend is never a recommended option, so be extra careful, when taking these kinds of trades.

A perfect example of a sweet correction is the USDCAD. Here we see that the USD has been climbing the price ladder from the very first day of 2020. The price managed to touch 2016 highs and this is where the correction started. On an hourly chart, we can see that USDCAD created a handsome head and shoulders formation and already broke its neckline. The price is in sell mode right now but keep in mind that the minimum target for the Head and shoulders pattern was already made, so buyers can be ready for another upswing. Nevertheless, the current short-term sentiment is negative.

The correction stopped on Gold too and the price where it happened isn’t random at all. The XAUUSD stopped precisely on 38,2% Fibonacci of the trend which began at the end of 2015. These are also important lows from the end of 2019. I think that the bounce at this point, can start another bullish wave for the metal.

Lastly a small update on the SP500, where we do have a bounce, however, it doesn’t look like a hardcore reversal. Personally, I don’t believe it’s even good enough for a relief rally, its just a dead cat bounce. The price managed to break the upper line of the pennant and break the mid-term down trendline. It sounds promising but the movement lacks momentum. It’s not how reversals should look like, especially after the cashes that we’ve seen before. The bounce can go as far as the 38,2% Fibonacci but I think it could be too much for weak buyers.

Is that The Place Where We Bounce?

Turmoil on the markets continues. We go from bad to worse, from fear to hope and markets are moving from -8% and circuit breakers to +5% giving sparks of optimism. Seems like traders are slowly adjusting to this and we are in the mode of looking for the most promising trading occasions.

A lot of attention revolves around Oil, which managed to break 2016 and 2019 lows hitting its lowest level since 2001. Currently it’s at around 20 USD/bbl. a level that seems unbelievable to most traders. This creates an urge to buy the dip but the problem is “where’s this dip?” As You can see on the chart, areas around 17 USD/bbl. seem promising as these are lows from 2001. Personally, I don’t believe that the storm is over and I think that we could see levels drop below 20 USD pretty soon.

Now the DAX. The German Index finally reached 8200 points, a level anticipated by us and coming from the highs of the dotcom bubble and the great financial crisis. Technically, it looks like an excellent place for a bullish bounce. Overnight, the price tried to break this level but buyers managed to perform a counterattack driving the index to the green side of the market. In addition, the DAX is now trying to break the mid-term down trendline. So, a breakout of the trendline and the double bottom on such an important support, can be a great buying opportunity.

Now let’s look at the Dow Jones. Sellers managed to break the magical 20k barrier. The price also broke the long-term up trendline. This is negative but we are still above the horizontal support level of around 18500 points coming from 2016 and 2016 highs. As long as we stay above this support level, buyers can still have hope.

Oil and DAX In Quest to Test a Crucial Support

If you like emotional trading, there’s no better time than now! Strong direction, volatile movements and plenty of opportunities across the market. We have interesting setups on almost all types of assets: commodities, currencies and indices.

Let’s start with the Oil, where the price is constantly flirting with long-term lows. Demand for this commodity remains low and the threat of a prolonged price war in OPEC remains significant. Technically, after last week’s drop, the price created a pennant, which was promoting a breakout to the downside. The price indeed broke the lower line of this pattern and went even lower. As long as we are above the 28 USD/bbl. There’s no panic but the pressure on that support is rising. A breakout, which is quite probable, can be potentially catastrophic.

Let’s take a look on the DAX, which quickly killed yesterday’s positive sentiment and is now breaking the lower line of the wedge pattern. This breakout is promoting a movement to the downside. We can assume that this setup will be reliable as the DAX has recently been good in respecting the trend continuation patterns. In march, we already had one wedge and a nice descending triangle pattern. It seems that another test of the 8200 mark is the base option for the DAX right now.

We must talk about the EURPLN again today. We were bullish about this pair from the beginning of March. We saw this beautiful inverse head and shoulders pattern and we anticipated the movement to go up. Although expected, the scale of the movement was still surprising even to us. The price is now almost 2000 pips higher! What helped a lot here was the breakout of the upper line of the symmetric triangle pattern and the breakout of the highs from 2019 and 2018 (around 4.4). The next target here is the 2016 highs of 4.5.

Bulls Try To Catch A Breath

Thursday night and Friday morning brought us a coordinated attempt of a bullish reversal on many instruments. Interestingly, this upswing is present on both safe havens such a Gold and more risky instruments such as Stocks. This can indicate not the comeback of one particular sentiment but a comeback of liquidity. We’re not saying that this comeback will be permanent, most probably it will be temporary and of a very speculative character.

Nevertheless, here we are. Gold, after four strong bearish days in a row, is finally heading higher. The place where the reversal started was not random. The price used a combination of two supports: a horizontal one on the 1555 USD/oz and a dynamic one on the long-term up trendline. As for now, we are drawing a really beautiful bullish candle with a long tale. As long as the price stays above those supports, the sentiment is bullish.

Now let’s talk about SP500; the price bounced a bit but we are still deep in the bearish cave. Today’s bounce can be considered only as a dead cat bounce and nothing more. It’s worth mentioning that the current drop is already bigger than the one from 2008 and this time it took only four weeks! The price is now meeting the crucial long-term up trendline and the important horizontal support around 38,2% Fibonacci. This may be a good occasion for a bounce but with all the troubles around, I don’t see a chance for a rapid comeback to a bullish sentiment.

Lastly, a quick update on the EURPLN, which is having one of its best weeks on record. This doesn’t come as a shock since the price is under the influence of a nice inverse head and shoulders pattern. In addition, the most recent rise, broke the upper line of the symmetric triangle, which in theory can be an ultra-strong buy signal. The only obstacle here is the highs from 2018 and 2019 at around 4.4. That area will probably attract many sellers, so keep in mind that chances for a reversal on that resistance are quite significant.

Bullish Annihilation Underway

Our update today will be short and sweet because the vast majority of the instruments we’ve been commenting about are moving in the anticipated direction. Markets are still falling as governments fail to stop the virus from spreading globally and investors haven’t calmed down. In some markets we are simply seeing traders in panic mode and any attempts to rationalize their behavior are pointless. That’s a ripe example of trading psychology which is the ultimate battle between fear and greed with us somewhere in the middle.

Let’s get to the details, as expected, the wedge on Oil resulted with a breakout to the downside. The hammer on the weekly chart is under pressure and the price will most probably test the 28 USD/bbl. support again soon. That line is absolutely crucial for buyers and as long as we stay above, demand can at least have a hop about a local bottom.

Now the DAX; in our previous analysis, we estimated that the areas around the 8200 points look good for a potential bottom of the bearish trend. So far, the price is doing everything to get there. Apart from the fact that this price was a high from before the great financial crisis and the dotcom bubble, it is also a 50% retracement of the up trend started in 2003. Until we get there, sellers seem safe.

Lastly the EURPLN, which may be a bit exotic for you but it still has a nice technical setup. Several days ago, we pointed at the beautiful inverse head and shoulders pattern. The formation got activated at the end of the February, after the EURPLN broke its neckline. A week ago, the price tested that neckline as the closest support and went higher. That’s what we call a confirmation and since then, the price went 500 pips higher. The sentiment for the EURPLN remains positive.

Oil Confirmed Crucial Support. S&P500 Still Trying To Find One

The weekend was a mood killer for risk on camp on Monday we saw a global sell off of risky assets and another escape towards cash – reducing liquidity – and safe haven assets. On Tuesday and Wednesday things have been calmer, we will try to look for more technical setups which are more based on dots and less on panic and fear.

Oil was the star of Monday’s trading; prices collapsed after Saudi Arabia cut prices and announced an increase in production. Oil price plummeted to early 2016 lows at around 28 USD/bbl. At this point the price reversed creating a long tail on the weekly candle. We are using a hammer candle and on a support like this, it can be considered a strong buy signal.

Combined with price action, we can assume that 28 USD/bbl is an absolute low for the price of oil and the chances of it dropping further are very low. However, the short-term chart and the wedge show us that some kind of small drop is still around the corner.

Let’s look at SP500, also in the short-term, what we have here are two flags, one already resulted with the breakout to the downside, the second is just being formed as we speak. If history likes to repeat itself, the second flag, should also result with the breakout to the downside. This view is obviously supported by the negative mood around the world.

Last but not least is the EURGBP. The Bank of England cut rates, which caused a short-term depreciation of the GBP. Short-term only, as now, the GBP is back on track, shrugging off the cut. It does not change our long-term view on the EURGBP, where we continue to be bullish. On the weekly chart, you can see a beautiful double bottom formation bouncing from the 0.833 support level. The next few days could bring us a bearish correction here but in the long-term, the sentiment remains positive.