Markets Are Just Looking For An Excuse To Capture Profits
Look, how easily it is to forget about something, which was on the first pages for a long time. Iran – US conflict seems no longer a threat. In this case, short memory negatively influenced Oil, which is currently going down, additionally dragged down by the weaker USD.
On Oil, the spike from the beginning of January, can be considered as a false breakout above the symmetric triangle pattern or just a simple bounce from the major horizontal resistance. Its not important how we name it, the most important is that it was followed by a huge drop. Current slide breaks major dynamic support, giving us a fresh bearish sentiment.
One of the reasons of the falling price of Oil is stronger USD and it can be perfectly seen on the EURUSD, where we do have a very handsome bearish setup. What we have here is a false breakout above the down trendline, then a head and shoulders pattern and then a wedge. All three events can be considered as extremely bearish, so traders should not be surprised to see a massive decline now and possibly, also in the nearest future.
Let me come back to the indices. Yesterday I was showing you DAX and I would like to discuss this instrument again today. We may say that traders fear the Coronavirus or we may also say that they just use it as a perfect excuse to capture profits from the recent gains. Candle from yesterday is nothing extraordinary. Look at the daily chart and in previous months, you will see few of them. Last few years on the stocks should teach us at least one thing: every single decline was later used as a great bargain and eventually brought us new tops.
This article is written by Tomasz Wisniewski, Director of Research and Education at Axiory
This article was originally posted on FX Empire
