Oil Crashes Again. Gold Is Ready For New HighsAs the last week of March begins, we can see the risk-off sentiment return to the market.
As the last week of March begins, we can see the risk-off sentiment return to the market. This Monday appears especially difficult for oil bulls; after the weekend the price opened with a bearish gap dropping below the 20 USD/bbl level. The price slid under the horizontal support level of 20.6 USD/ bbl and turned it into a new resistance level. In addition, oil remains under pressure as quarantine regulations are extended in several countries which will decrease the already low demand for oil.
In other commodity news, gold is under a brighter light with positive sentiment. Last week we mentioned the triangle pattern, which as anticipated, resulted in an upside breakout. After the triangle we saw a wedge pattern, which means a trend continuation and that signifies a potential upside breakout.
Now moving on to indices; the DAX closed last week with a small drop after the price tested the 38,2% Fibonacci retracement level. After a second test, the price drop accelerated breaking the lower line of the pennant formation. Fast forward to Monday, the DAX opened with a bearish gap followed by a quick rise which aimed to close the gap.
Sentiment for the index appears negative. For now, the price is drawing the right shoulder of the head and shoulders pattern. Considering it’s at the top of a bullish correction and is bouncing from the 38,2% Fibonacci retracement level, it’s reasonable to be bearish. A proper sell signal will be triggered, when the price breaks the red neckline.