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Markets Start Week Cautious, Creating Fresh Buying Opportunities

Monday morning was the same as Friday night for global indices; we saw a visible risk aversion. Fundamental triggers pointed us into that direction, rising COVID-19 cases around the world and most noticeably Apple’s announcement that it would be shutting down some shops which have been strongly affected by the crisis. Otherwise, a bearish opening for the markets on Monday morning did not spook investors. Instead, traders rushed to buy, supported by lower and more attractive prices.

The DAX created a bearish gap in today’s market open, which allowed the price to break the rectangle pattern. The first movement to close the gap, which has been anticipated by buyers, went as far as pulling the price much higher. The movement created a false bearish breakout, which is generally viewed as a sweet buying opportunity. Despite this turbulence, sentiment is once again positive.

Gold has been locked in a long-term sideways trend in between the 1740 USD/ oz resistance and 1670 USD/ oz support. The strong Friday market close, and initial risk aversion on Monday morning allowed the price to break the upper line of the range. The price is still relatively firm and stayed above the resistance level. Gold buyers have outperformed DAX sellers. As long as the price stays above the 1740 USD/ oz support, sentiment will remain positive.

Lastly let’s take a look at the EUR/USD, which has been drawing a head and shoulders pattern for the last couple of days. The price was right above the neckline, waiting for a proper breakout, but the bearish potential blurred out the breakout and it didn’t happen. Instead, the head and shoulders pattern eventually got a wedge, which promotes an upswing. If the price breaks the upper level of this pattern, we’ll have a buy signal.

Markets Start Week Cautious, Creating Fresh Buying Opportunities

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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