After hitting 2167 resistance overnight – the markets sold off again to the bottom of the prior B-wave — in the mid 2130s on Duetsche bank contagion fears.
But then the market reversed from the overnight lows and went back towards 2167 –breaking by a few points towards 2169 – before correcting back to 2156 after the close.
In my opinion, if this is to be a bearish market, yesterday’s rally should not have happened. From the bigger picture and on a daily chart perspective, we’ve mostly been consolidating making a series of higher lows — first 2100, then 2110, then 2128, and then 2132/33, then 2138/2135 in the last two days.
Prior resistances have been 2171, 2167, 2152, 2148. So potential support levels next are 2148 and 2152/2153 if we are to test on the downside again.
That said, this is October before an election, so volatility could mean a lot of uncertainty.
At 3:30am, Deutsche fears were highest – but reversed by end of day.
In terms of why the past two months hasn’t been so good — I think because the market has not had a net vertical movement in any direction. So if a trade depends largely on directional movement, I haven’t been able to generate any returns recently because the market condition has changed. Any trade of the week doesn’t last because no directional movement lasts for more than a day or two.
This contrasts with January 2016 when the directional movement was more pronounced or before and after Brexit.
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