What a Monday we’ve had, traders seem to have responded well to unlimited money supplies from the Central Banks and the introduction of new stimulus. This comes at the heel of optimism over the spread of the coronavirus in Europe, where the curve continues flattening, indicating the worse may be behind us. This is great news for the world but also a good sign for buyers.
While the future remains uncertain and there are talks of unemployment reaching an average of 30%, at this point it seems traders aren’t worried, as long as they have cheaper stocks to trade on and that’s why today’s focus will be on indices.
Let’s start with the DAX, the index managed to finally destroy the 38,2% Fibonacci level. The price seems to be on the right track to cover the gap formed in the beginning of March. First it must break two important resistances; the first one is the upper line of the wedge and the second is the 50% Fibonacci level.
The wedge tends to be a trend continuation pattern so a downward movement is still likely, mid-term buyers however, can still enjoy trading the rise of the index.
We’re moving on to the Down Jones which was yesterday’s index of focus. The inverse head and shoulders pattern has worked allowing the price to test the 38,2% Fibonacci level and then break it. The next Fibonacci resistances however, are not so promising. Recent price movements have touched the 23500 and the 24900 resistance levels.
The SP500 is in a similar situation; the price has easily surpassed the 38,2% Fibonacci level. Now the price is challenging the local resistance level of 2700, which looks promising for sellers. In my opinion the crucial resistance for the SP500 is the 2880 level, where we will have the upper line of the flag. This is also a trend continuation pattern.
This article was originally posted on FX Empire
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