Hello traders!
Welcome back to my weekly technical analysis for the upcoming week starting today, February 15th, 2016.
What a crazy week we had last week. Wherever you went you could see a volatile bear market that ended with the bulls on top. The big question, the one all us traders are asking ourselves, is where will the market go from here. Are we going to see ongoing volatility? Is is going to be a straight up bear market, or will the market recover from the most recent drop?
There are lot of worrying news stories circulating around the globe. The major world economies are each grappling with complex problems that directly impact market sentiment. China is dealing with slower than GDP growth than it saw over the past 25 years; A lingering concern of a financial bubble in the US; A tenuous situation of Deutsche Bank in Europe. For the more pessimistic among us, you might feel validated as the overall picture seems to be gloomy. Nevertheless, when it comes to the stock market, you can never tell what will happen.
If you want to brave the stock market based on technical analysis, you can get a better sense of the market sentiment through the S&P index, which is used many times as compass to measure the direction of the market.
As always when we identify a trend, let’s being with a simple naked chart and mark the trend of the market on a higher, zoomed out time frame. As you can see in the below chart, the S&P index is still moving between the uptrend range marked by the resistance and support lines. As long as the price of the S&P index stays within the range it is still moving in an upward trend.
In the event that the S&P index breaks from the upward range, it’s going to be violent. The best way to see if the right setup exists for a winning trade is to zoom into a daily or 4 hour chart. Make sure the break candle closes below the support line.
Chart: S&P Index
On the other hand, there is always the possibility that the market will retrieve from its last sentiment and continue with the bullish trend.
Next I wanted to touch briefly on the EURUSD. In the weekly chart the trend is horizontal, so it is a good opportunity to place an option on a short timeframe such as a 1 hour as shown in the chart below.
Chart: EURUSD
The currency pair is moving in an upward flag. From here it is possible to keep the bullish trend, just make sure to switch direction when it breaks from the flag support line.
The last asset I want to touch upon is crude oil. For those employing fundamental analysis in their interpretation of the market, what’s happening with crude oil can seem particularly confusing. Especially given the constant turmoil in oil producing regions. When using a technical analysis, you can see that despite the retrieve over the last 2 days, oil is still showing a bearish trend. Looking at a daily chart, the bearish pattern is quite clear.
Chat: Crude Oil
A break from the resistance line amy initiate a bullish or horizontal trend. Until the break, we can anticipate new lows with crude oil. One good sign that might indicate an end to the bearish trend will be a significant bearish candle.
Thanks to everybody who’s been reading my weekly technical analysis! I appreciate your readership and support. I always love hearing from you!
Good luck!
