Stock Traders Try To Temain Calm

Stock traders try to keep their emotions under control but the global fear is just not letting it go. Yesterday’s session started badly, but at the end of the day, buyers managed to pull prices higher, creating interesting reversal patterns. Normally, it should be a very positive sign but Friday does not start with euphoria or even a small optimism. This can get ugly…

Yesterday’s daily candle on the SP500 is really sweet. Long tail and a nice bullish body. When this type of candle emerged on the chart in the past, usually it gave us a further upswing. If we would have to trade based only on this, we would be optimistic but we have to consider other factors too. Like for example, if traders would want to stay with the opened long positions for the weekend, when many things can happen (Good too, like finding a cure!). If we will focus on the technical analysis alone, as long as we stay above yesterday’s lows, sentiment is positive.

DAX made a similar reversal although here, daily candle is a typical hammer. Hammer is on two important dynamic supports and is also a part of a

double bottom formation. Again, in normal circumstances, that should be an ultimate buy signal but time is a bit different now. Surprisingly, Friday starts on the back foot. If both supports will be broken, we would have huge troubles here.

Last instrument is Oil, where buyers definitely NOT enjoy January. Month started with new mid-term highs and is about to finish on the lowest levels since October. On the last trading day of this month, buyers try a small reversal coming from the double bottom formation and a hammer on the daily chart. Even if it will work out, most probably it will be just a small correction as after the breakout of the main dynamic support, the sentiment in the longer-term is definitely negative.