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Another Bearish Pattern On S&P 500, DAX

ByAxiory
AuthorTomasz Wisniewski
Published 07/09/2020, 05:45 AM
Updated 01/03/2021, 09:10 AM

The end of Wednesday’s session brought a sweet bullish reversal for global indices, which confirmed the defense of crucial mid-term supports. That should have given us significant optimism on Thursday morning but today buyers seem rather skeptical and they aren’t following that bullish sign from yesterday, at least not yet. Maybe it’s because of the fact that on both major indices; the DAX and S&P 500, we can spot head and shoulders formation in their late stages – as in finishing the right shoulder.

Let’s start with the DAX, which seems to have rounded the top of the right shoulder and is now heading to test the neckline. That would mean a short-term sell signal. In the mid-term, as long as the price stays above the neckline, the sentiment is still positive as we have to remember that the price escaped to the upside from the long-term symmetric triangle pattern.

The SP500 is going through a similar situation as the DAX but here we do have two crucial supports. The first one is the neckline – which is dynamic - and the second one is horizontal on the 3155 level. As long as the price stays above those two, sentiment is positive.

We’ll finish with a quick look at the EUR/USD, where the price smoothly moved from making lower highs and lows to higher highs and lows. Today, buyers are trying to break the crucial horizontal resistance of 1.1345. The first attempt was rather unsuccessful as it met a decisive counter-attack. So, watch out for a false breakout, which can be a very negative sign here.

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