Market Is In The Sideways Trend, Waiting for a Bigger Movement

The market has cooled off in the last few days; there aren’t any major movements and most of the instruments have been locked in a mid-term sideways trend. While this may sound boring, it’s a great base for building anticipation for the big movements to follow. Trend followers can have a short break for now but they will soon be very busy again.

The first hero of the day is the DAX which has been in a sideways trend since Tuesday. The lower line of the range is the neckline of the double bottom formation, which cancelled its bearish correction on Monday. Today, the price is trying to test the resistance again. Based on the current sentiment and the central bank’s money printing, the price should break the resistance and set new mid-term highs.

Moving on to Gold, a major commodity for FX traders that’s also stuck in a sideways trend since before Tuesday. The price has stayed between the 1670 and 1740 USD/oz level since the beginning of April, only seeing a small break when there was a false bullish breakout mid-May. As long as the price stays in the sideways trend no major movements are expected. Only when the price breaks out of the 1740 level, we would have a proper buy signal. If the price breaks out of the 1670 level, we’ll have a sell signal.

Lastly, we’ll look at the EURUSD which has been consistently dropping. We recently looked at the pair and said that the price is drawing a head and shoulders pattern, now the EURUSD is finishing the right shoulder. Technically we don’t have a legitimate sell signal yet since the price hasn’t broken the neckline. It’s good to note that it’s always better for price action if the neckline is inclined rather than declined, as it currently is with the EURUSD. Sentiment is leaning more towards negative, and it’s slightly more probably that the price will test the 1.1 support level, so we expect a further slide.

For a look at all of today’s economic events, check out our economic calendar.