Yahoo Finance So What, No Recession?
Yesterday morning, we recorded a video analysis, where we were informing you about the potential buy signal on the DAX, coming from the breakout of the neckline of the inverse head and shoulders pattern. The price broke the neckline, went higher and the DAX saw one of its best days on record. We can’t say we’re surprised.
Wednesday on the European Market started with a small pullback but I guess it’s normal after an upswing like that. The DAX is close to the 10200 points so a 38,2% Fibonacci retracement of the coronacrash. I think that they will not waste this great occasion to test this resistance. In my opinion, the future of this instrument depends on what will happen there. A strong reversal can easily end this relief rally but on the other hand, breakout should attract bulls, looking for bargains on the discounted market.
Can we spot a similar situation in the US? We most definitely can but the scale of the reversal is lower. The Dow Jones also created an inverse head and shoulders pattern and broke the neckline. The thing is that the momentum is not so significant as with its German counterpart. Americans, so far, retraced only slightly more than 23,6% of the coronacrash. A 38,2% line is still far. Nevertheless, as long as we stay above the neckline, the mid-term sentiment remains positive.
Let’s check the sentiment towards the emerging markets currencies, I will use the USDPLN as an example. We can see that sentiment here warms along with the one on the stock market. USDPLN stopped this crazy upswing on its 2016 highs. On the hourly chart, the price is creating a head and shoulders pattern and is trying to break the neckline as we speak. A successful breakout can bring us to areas around 4.12.
This article was originally posted on FX Empire
