Yahoo Finance On This Market, Bearish Gap is Just a Bullish Opportunity
Monday morning was the same as Friday night for global indices; we saw a visible risk aversion. Fundamental triggers pointed us into that direction, rising COVID-19 cases around the world and most noticeably Apple’s announcement that it would be shutting down some shops which have been strongly affected by the crisis. Otherwise, a bearish opening for the markets on Monday morning did not spook investors. Instead, traders rushed to buy, supported by lower and more attractive prices.
The DAX created a bearish gap in today’s market open, which allowed the price to break the rectangle pattern. The first movement to close the gap, which has been anticipated by buyers, went as far as pulling the price much higher. The movement created a false bearish breakout, which is generally viewed as a sweet buying opportunity. Despite turbulences, sentiment is once again positive.
Gold has been locked in a long-term sideways trend in between the 1740 USD/ oz resistance and 1670 USD/ oz support. The strong Friday market close, and initial risk aversion on Monday morning allowed the price to break the upper line of the range. The price is still relatively firm and stayed above the resistance level. Gold buyers have outperformed DAX sellers. As long as the price stays above the 1740 USD/ oz support, sentiment will remain positive.
Lastly let’s take a look at the EURUSD, which has been drawing a head and shoulders pattern for the last couple of days. The price was right above the neckline, waiting for a proper breakout, but the bearish potential blurred out the breakout and it didn’t happen. Instead the head and shoulders pattern eventually got a wedge, which promotes an upswing. If the price breaks the upper level of this pattern, we’ll have a buy signal.
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This article was originally posted on FX Empire
