What Price Action Indicates For DAX, Dow Jones, USD/CHF

When we say: don’t fight the Fed, we really mean it. Sellers tried, they had many occasions to bring indices down, both fundamental and technical but they kept failing. When I go through twitter, I see many traders who don’t agree with the current bounce. They would love to see a crash and another leg down. They don’t agree with the Fed and point out that the market is broken and a waste of their time, to emphasize that the current upswing makes no sense.

Maybe it does and maybe it doesn’t. We’re not economists so we’re not here to judge. I think many traders forget what trading is all about. In my opinion, trading is about taking advantage of market movements, wherever they move, whether we agree with them or not.

Now let’s look at what’s happening in the market; the DAX tried to form a head and shoulders pattern twice and failed both times. Most recently, the price broke the 50% Fibonacci with a really firm upswing. That’s definitely a strong bullish sign. Thursday starts with a small drop but testing the broken resistance as the closest support is one the most important principles of Price Action. As long as the price stays above the 50% Fibonacci, mid-term sentiment remains positive.

The Dow Jones is in a similar situation. Sellers tried two head and shoulders patterns and even one triple top, but nothing worked. Every bad news from the economy is considered good news. I remember that from trading between 2008 and 2013 and you know what happened then? The market was going up! Currently, the market stopped at the 24900 points level, which, historically speaking, is a good occasion to take profits, especially after the recent rise. Even a bigger bearish correction should not change the fact that that market is in the early stages of a new bull run now.

Let’s move on from indices to the USD/CHF pair, which is getting ready for a major movement which will most probably be a drop. The USD/CHF is in a long-term boring sideways trend. Most recently, the price tested the crucial resistance of 0.98 and bounced from it twice. Price action indicates a determination in the sellers’ camp. For a proper sell signal, we need to see a breakout of the 0.972 support, which may happen really soon.