Here we go again, sellers are trying to initiate another bearish correction on global indices and it definitely looks promising for the bears. Our rollercoaster, that we love so much, is back. There are upwards movements caused by COVID-19 vaccine hopes and declines caused by the rising number of cases and fear about the shape of economies and their recovery. In the meantime, the unprecedented stimulus program from central banks looms in the background.
The SP500 made a double top formation, which is already active as the price broke the neckline of this pattern, which was additionally a crucial mid-term horizontal support. Together with the neckline, the price also broke the mid-term up trendline, which was connecting higher lows since the end of June. The short-term sentiment is negative and we can assume that the price will target the longer up trendline, which has been connecting higher lows since May.
The second instrument is the USDCAD, where the price did exactly what we were expecting it to do in the past few days. The Loonie was bearish as the price broke the lower line of the symmetric triangle pattern and the horizontal support of 1.35. We said, that the perfect targets for the drop are the areas around 1.335, where we have an absolutely crucial horizontal support. We’re not surprised that the price went there and reversed sharply after a short test. That allowed it to create a hammer on the daily chart, which promotes a mid-term buy signal.
We will finish with the USDJPY, which has been inside of a triangle pattern for several days. We warned our traders that the way to handle this pattern is to buy when the price breaks its upper line and to sell when the price breaks the support. Today, during the Asian session, the price decided to break the support, which gives us a very strong downswing. An obvious target for this slide is the psychological level of 106, which has a proven record of effectiveness.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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