The German Dax closed 0.54% higher, again, after the European market followed the previous pattern of gains in Asia. The Hang Seng Index, Nikkei and Chinese mainland markets closed 2% higher on average. It seems that optimism about the economic recovery is still being baked into the market’s view on fair value.
The question is now, not whether it is a real bull run or not, but how long can it sustain the move. Eur/Usd charts from TheLFB Elliott wave Team.
The Eur/Usd and the S&P are facing significant resistance levels at the moment, at a price point where a technical bounce to the down-side may easily come into play if fundamentals do not stay aligned in their current form.
The 1.4719 top on the Eur/Usd from December 2008 is a very important level, that traders are patiently waiting on the market reaction to, while the S&P is trading around the resistance line and the 50% Fibonacci retracement area, measured from May of 2008 to March of 2009.
“Any daily, or even better, weekly close, below the 50% level shown on the S&P chart at 1045, will suggest that a temporary top is in”, said Grega Horvat, Snr Technical Analyst at TheLFB.
“If this follows through the Usd recovery should follow soon after. That should drive the majors lower, and the Eur/Usd pair away from the current resistance level around 1.4750. The low volume push to yearly highs is concerning, as that scenario tends to lead to stair-step up and elevator rides down” Grega Horvat added.