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Dollar Price Look Up, As Dark Clouds Form Over Stock Traders

ByAxiory
AuthorTomasz Wisniewski
Published 10/22/2020, 06:11 AM
Updated 01/03/2021, 09:10 AM

Dark clouds gathered above stock traders. Major supports are being threatened and their breakout can lead to a massive selloff. As for now, we are still relatively safe but the future can be pretty red if sellers will manage to break bullish defenses.

We will start with DAX, which created a massive head and shoulders pattern. Today, we are testing the neckline of this formation. The test is so far positive for the buyers as we have bounce but the question is, if they will be able to hold it like this for a long time. As long as we stay above the neckline, we don’t have a sell signal but it does not mean that we will not get any soon.

London’s FTSE is also defending crucial support and it’s the lower line of the wedge. Here, buyers already surrendered one stronghold – 5800, which was a crucial support in all of September. In theory, its breakout should be lethal but today’s drop is somehow limited. Actually, the price is trying to create a hammer candle, which at some point can be viewed as a positive sign.

Thursday brings us a correction attempt on the USD. Dollar Index was falling sharply in the last few days and now it’s a time for a small reversal. Technically, this movement is supported by the inverse head and shoulders pattern on the Dollar Index. We are breaking the neckline as we speak and if the price will hold above, the next several hours can be positive for the Greenback.

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