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The DAX is very near making a potentially important break from a two-month-long rising wedge formation. Today, we took a look at two bearish scenarios and one bullish. These patterns can lead to powerful moves, and given the DAX’s global importance it won’t be an isolated event. The CAC 40 is also putting in a similar formation, unsurprisingly, at a 16 ½ year trend-line. Interesting confluence indeed.
The S&P 500 continues to trade on trend-line support, with the general bias given to the trend and support, but should it break down and the DAX also break the rising wedge to the downside we could be in for a decline. The FTSE 100 continues to tread in record territory, no great directional cues to operate off of here. The Nikkei 225 is stuck in an ascending wedge formation, and until it can break free it remains the least interesting of the bunch.
Gold and silver look likely to hold a bid at the least and probably move higher on the back of a weak US dollar. Our conviction for a rally in precious metals is limited, but if the DXY is any indication, then they should be supported in the near-term. Copper, on the other hand, has a bearish sequence of lower lows and lower highs in place since breaking down out of a sloppy head-and-shoulders pattern.
Crude oil continues to work off short-term oversold conditions but looks like with a little more time it will head lower. A drop below last week’s key reversal day low should be enough to kick off another leg towards the 43/42 area.
For full technical considerations, please see the video above.
---Written by Paul Robinson, Market Analyst
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