Oil and SP500 on important Trendlines. EURUSD waiting for a TriggerSanctions on Iran and ‘broken’ Trade deal are still negatively affecting vulnerable, riskier assets. This creates a good environment for the correction on some of those instruments. As an example, we give you indexes.
What is interesting, when you look at the chart of for example SP500, is that there is a huge correlation with the chart of Oil. This is nothing new as, from time to time, both instruments follow the same path but knowing when, can be a useful tool for trading. Currently, this huge correlation is with us at least since the beginning of the year.
Both instruments are currently above the long-term up trendlines. Crude looks slightly much better as the price is creating an inverse head and shoulder pattern. This may be a good start of an upswing but to see the rise, we need to witness the breakout of the neckline first. SP500 looks a bit more negative as the price is putting constant pressure on the up trendline, which may indicate a willingness for the breakout. In both cases, price closing a day below the black lines will be an invitation to go short.
The third instrument mentioned here will be the EURUSD. The volatility dropped recently and clearly, we are looking for a direction. The main pair is in the symmetric triangle pattern waiting for a proper impulse. A scenario in those cases is pretty simple. Price closing a day above the upper line will be a buy signal and price closing a day below the lower line of the triangle will be an invitation to go short.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis