This week has begun with plenty of optimism across the markets. The coronavirus curve is starting to flat out across Europe with many countries which were hit the hardest reporting lower cases and deaths over the past few days. This has driven many markets to surge, shedding some light at the end of the tunnel.
Let’s start with the Dow Jones which opened this week with a bullish gap, followed by an upswing which left the gap opened. From a technical point of view the DJA created an inverse head and shoulders pattern on the 23,6% Fibonacci retracement level. During the first few hours of trading on Sunday, the price managed to break the neckline and that’s a buy signal. The next target for this movement is for the price to hit the 38,2% Fibonacci level, in my opinion, as long as the price remains below that crucial resistance level, the mid to long-term sentiment remains negative despite this short-term surge.
Gold also started the week with a quick rise, this move is mostly attributed to a weaker USD. The crucial development for Gold is still last week’s comeback to above 1600 USD/oz, which killed the mood for a bearish correction. As long as the price remains above 1600 USD/oz, sentiment for the precious metal will remain positive.
The last instrument on today’s agenda is the EURGBP. Here we saw a very interesting technical situation which emerged after the price broke the psychological support level at 0.9. During its steady downtrend the price created four beautiful trend continuation patters; two flags and two wedges. The last wedge ended right on the long-term downtrend line. The price has already broken the lower neckline of the pattern and that’s a very good sell signal.
This article was originally posted on FX Empire
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