July did not end in a good mood, at least on the major stock exchanges. Prices collapsed sharply and it was not looking good for the buyers but if somebody was looking for a bigger reversal, boy they must have been just recently born. Betting on a bearish trend has one serious problem: you are betting against the central banks, which was never a good option and most probably will never be. Long story short, on Monday, traders experienced a small euphoria, which canceled the bearish sentiment from the end of the last week.
Tuesday on DAX started with a nice upswing but the beginning of the European session brought us quite a significant drop. Why? The answer is 12800. This is absolutely crucial horizontal resistance, which is conducting price movements since the beginning of July. After such a sharp rise on Monday, the price reached this level and traders decided to use it for taking some profits. Most of the price action traders could have easily predicted this. As long, as we stay below the 12800, the short-term sentiment is negative.
If we are mentioning the price meeting a strong horizontal resistance, we have to show you the USDJPY. Here, the price is currently bouncing from ultimate horizontal resistance on the psychological level of 106. This line was a support in May, June, and July, so we do not have to explain its importance. As for now, two daily candles have long heads. Price closing a day below the orange line will confirm the mid-term bearish trading opportunity.
The last one is the EURPLN, which I mentioned a few times in my video, pointing at how technical the recent movements are. So, we had the bearish breakout from the triangle and wedge and now, the price is trying the bearish breakout from the flag. The place, where this is happening is not random. We are on a crucial long-term horizontal support on the 4,4. Price closing a day below the lower line of the flag and below the orange support, will mean a proper long-term sell signal.
For a look at all of today’s economic events, check out our economic calendar.