Bullish Annihilation Underway

Our update today will be short and sweet because the vast majority of the instruments we’ve been commenting about are moving in the anticipated direction. Markets are still falling as governments fail to stop the virus from spreading globally and investors haven’t calmed down. In some markets we are simply seeing traders in panic mode and any attempts to rationalize their behavior are pointless. That’s a ripe example of trading psychology which is the ultimate battle between fear and greed with us somewhere in the middle.

Let’s get to the details, as expected, the wedge on Oil resulted with a breakout to the downside. The hammer on the weekly chart is under pressure and the price will most probably test the 28 USD/bbl. support again soon. That line is absolutely crucial for buyers and as long as we stay above, demand can at least have a hop about a local bottom.

Now the DAX; in our previous analysis, we estimated that the areas around the 8200 points look good for a potential bottom of the bearish trend. So far, the price is doing everything to get there. Apart from the fact that this price was a high from before the great financial crisis and the dotcom bubble, it is also a 50% retracement of the up trend started in 2003. Until we get there, sellers seem safe.

Lastly the EURPLN, which may be a bit exotic for you but it still has a nice technical setup. Several days ago, we pointed at the beautiful inverse head and shoulders pattern. The formation got activated at the end of the February, after the EURPLN broke its neckline. A week ago, the price tested that neckline as the closest support and went higher. That’s what we call a confirmation and since then, the price went 500 pips higher. The sentiment for the EURPLN remains positive.