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.
This article was originally posted on FX Empire
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