Global equities are starting to have that 'look’ again, with the DAX rolling over rather hard and breaking important support and the S&P 500 looking ready to test a very important bull-market threshold soon. Gold remains poised for lower prices, while WTI crude oil is holding up well, but the Brent contract might be building a more bullish chart pattern.
Technical Highlights:
- DAX decline picks up steam after break of support
- S&P 500 headed for a collision with major support
- Gold remains heavy, poised for lower levels
- WTI stronger than Brent, but the latter building a bull-flag
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DAX decline picks up steam after break of support
Last week, the DAX broke below support in the area of 12600/500, failed to recoup it on Friday’s retest, which then led to yesterday’s losses. More weakness is expected, with the February 2016 trend-line (~12100) up next as support, followed by a gap-fill at 11958.
We also discussed the broad head-and-shoulders top dating back to last June, which could come soon to implicate a much larger, sinister drop if the neckline is broken. It will need more time, so we'll discuss this further at a later time should it become relevant.
DAX Daily Chart
S&P 500 headed for a collision with major support
The S&P 500 broke down below the tops in May around the 2742-area, positioning itself for a very important test. In the area of the 2680/65 lies the February 2016 trend-line along with the 200-day MA, confluence which has kept the market afloat on three occasions since February.
The thinking on this end is that a fourth test won’t turn out so well. A failure to hold this bull-market ‘line-in-the-sand’ could spell big trouble as the summer progresses. But, as always, we must respect support until broken.
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S&P 500 Daily Chart (Test of big support could happen soon)
Gold remains heavy, poised for lower levels
Gold continues to trade lower in-line with expectations, with the 1240s/30s as the targeted zone of support for the current move. Down below lies the December 2015 trend-line and December low. There is a lower parallel ahead of the zone; however, it’s not viewed as significant given the selling pressure.
Gold Daily Chart
WTI stronger than Brent, but the latter building a bull-flag
WTI recently proved again the strength of the July slope by not only holding it, but also it found a strong bid shortly thereafter. It remains a big ‘line-in-the-sand’ for both sides of the tape. While WTI has been stronger than Brent, the bull-flag forming in the UK contract could make it more appealing from the long-side. It would be ideal for a test of the one-year trend-line before breaking out, but not necessary to turn the bias bullish. A breakout from the bull-flag should have Brent rallying in-line with the longer-term trend.
WTI Crude Oil Daily Chart
Brent Crude Oil Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
