Sentiment improved on Wednesday and stocks
immediately rose sharply, with EU indices up 1 percent and the SP500 index
advancing 0.85 percent during the London session. It was trading at 2,660 USD
at the last check.
Yesterday’s sell-off stopped exactly at
October lows near 2,635 USD, but the price failed to drop below and therefore
this could potentially be a bullish scenario with a double bottom pattern. The
first major resistance of the previous bullish trend line is now being tested
and if the index breaks above this level, further rise toward 2,700 USD could
occur quickly and, the short-term outlook could turn back to bullish.
On the downside, if the mentioned trend
line resistance holds, we could see the continuation of the current downward
trend, with a possible target for bears at 2,635 USD. If this is broken,
another sell-off toward October lows of 2,605 USD might occur.
Stocks have dropped sharply over the last
two days and therefore, today’s correction was to be expected but bears should
defend 2,660 USD to keep the outlook negative.
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