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Potential Bearish Correction After Big Upswing Yesterday. Here's What To Watch

ByAxiory
AuthorTomasz Wisniewski
Published 05/19/2020, 06:18 AM
Updated 01/03/2021, 09:10 AM

What a session we had yesterday, not that it wasn’t expected. In yesterday’s market news, we highlighted the possibility of an upswing on major global indices. The scale of the rise was a little higher than our expectations. As the case often is, after such a session there’s time for a bearish correction. It should not cancel the bullish sentiment but on a market like this, who knows.

We will start with an update on the S&P 500. As you can see, the inverse head and shoulders worked like a charm, which significantly accelerated the bullish momentum allowing buyers to break the upper line of the flag. The upswing stopped on a very important horizontal resistance, so you can see that the current correction is not random at all. A breakout of the upper line of the flag is indeed very bullish but the ultimate long-term buy signal will be triggered when the price breaks the 2970 points resistance.

The next asset is the EUR/USD, which successfully defended the legitimate bearish threat coming from the rising pressure on the lower line of the symmetric triangle pattern. Currently, the price is testing the upper line of this formation, which is a treat for every price action trader. The breakout will give us a signal to buy and the bounce will give us a signal to sell.

We will finish with Gold where buyers have to be careful as the price may be drawing a false breakout pattern. A bullish attack from Friday and Monday was quickly reversed, which may create a negative environment. Sentiment is still positive but optimism around stocks can initiate a bigger correction on this precious metal.

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