It looks like the bulls did this again. Last week, the bears managed to create good-looking sell signals on major indices. After a few attempts and a lot of fearmongering, they finally did this. Unfortunately for them, it looks like the outcome will be the same as with the previous negative setups: denial and a bullish counter attack.
We will start with the SP500, where it looks like instead of the head and shoulders pattern, we will get an inverted version of it accompanied by the bullish flag. The price already broke the neckline of this formation and is currently aiming to the upper line of the flag. Odds for the price getting there are quite high.
The DAX, looks even better! Here, we also have an inverse head and shoulders formation but in addition the price returned to above the neckline of the bigger H&S pattern, that’s what gave us last week’s false sell signal. Furthermore, the price broke the mid-term down trendline, connecting lower highs since last Monday. With all that, this week’s sentiment looks optimistic.
We will finish with the EURGBP, which brought us the end of a mid-term sideways trend and the birth of a new uptrend last week. Optimism here is coming from the fact that the price broke the upper line of range trading and used it as a support. Furthermore, after the breakout, the price created a small pennant, which also resulted with a movement to the upside. In my opinion, the movement towards the 0.9 level is extremely probable. Most probably before the price hits that resistance, some kind of a bearish correction will happen due to the fact that the price seems a little bit overbought. Nevertheless, the main sentiment here is positive.
This article was originally posted on FX Empire
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