Yesterday we noted that if we saw the index below 1790 we should have anticipated a new lower low. The market did not disappoint us and made a new lower low that we think is very possible to be a short-term bottom. 1770 is important technical support that if broken could push the index towards 1758-63 price zone.
The volume traded in this price area around 1770 is not big enough in order to label this low as a longer term bottom. A bounce towards 1810-15 is justified since we are short-term oversold, but I believe the larger downward move that started from 1850 is not over.
As shown in the chart above, the volume bars near the highs is a very worrying signal for the longer-term bullish trend. My expectations are to see a bounce in order to complete the right hand shoulder and then test the neckline at 1770. The slope and form of the current decline makes me see more downside potential after a small upward bounce. However with Emerging markets being so volatile and the source of market turbulence I cannot rule out the immediate bearish scenario that pushes the index right now towards 1750-60. This scenario will come true if are unable to break above 1784-90 and if support at 1770-68 fails. For more help trading this index become a member today and see all our trades in real-time through our exclusive twitter account @trading2day.
As always, thank you for taking the time to read my new post.
A term used to describe a trader who is expects that a particular asset – be it a commodity, currency or product – to rise in value. The opposite of a ‘bear’.
The idea is that bulls attack by bending their heads and poking their opponents upwards with their horns, symbolising the fact that they are buyers, driving prices up.
Beliefs held by the aforementioned ‘bulls’ of the trading world, are described as bullish. Characterised by a generally optimistic outlook on the state of a given asset, a bullish outlook would suggest that a rise in value is imminent. Opposite of bearish.