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.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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