Is That The End Of The Bullish Rally?

Is today the day when indices will start another leg down? The DAX and major currencies are looking more pessimistic but is this really accurate? Let’s take a look at the details.

The DAX is creating a double top formation and where it’s being formed is not at all random. The DAX did a divergence on the MACD and bounced from the 50% Fibonacci retracement level. This sounds pessimistic which is a good sign for sellers, but we’ve heard this story before. We can’t depend on a proper sell signal until we see the price breaking the neckline of this formation. What should we expect next? Most likely an attack on the lower line of the wedge, once this is broken then sellers can think about another leg down on global stocks, but until then, the price is still in recovery mode.

Now let’s take a look at the EURUSD, it’s been locked inside the systematic triangle pattern which isn’t a great place to trade at because chances of the price moving up or down are equal. This time however, we can see a flag pattern and resistance at the 1.096 level which promotes a breakout to the downside. This potential breakout is also likely because the price has falsely broken the resistance of 1.096 before quickly falling back below it. This indicates a test of the lower line of the symmetric triangle.

Lastly, we’ll look at the pair we looked at yesterday, the USDCAD. The price of the pair had a nice sell signal which was eventually denied. The price returned above the horizontal resistance of 1.393 and broke the major down trendline. Sentiment is back to being positive.