Spread betting - Technical analysis review


Continuing from Friday's post, we saw the DAX test the top side of the down trend and the 63 SMA acting as support for the time being as the global equity markets open or looking to open higher. This could be an important week for the market as we await the Federal Reserve’s interest rate decision.


Should these levels hold we may look to test the 10520 level as this is the lower closing levels of the potential double top formation which may act as resistance. On the flip side if markets just consolidate going into the Fed's decision and break to the down side we may see the measuring target of the double top being achieved at 10085. All eyes and ears on the Fed.


Like most markets we are waiting for the Fed's stance on its monetary policy as we have witnessed a to and fro of dovish and hawkish rhetoric within the market making it increasingly difficult to find solid direction. This can certainly be witnessed in the gold market.


As you can see by the chart the price activity has been converging in a descending triangle formation with 1305/8 being the horizontal floor. What is apparent about this horizontal line of support is that is the 38.2% retracement of the move from the 30th of May which has been tested three times. In addition price is now potentially testing the upward trend from the December lows of last year.


This could be a rather significant test, because if this holds this could be suggesting the trend is intact and a resumption of the trend could be in play. However, should this potential support break two dynamics could be at play. Firstly it could be an apparent break of the trend suggesting the trend could be coming to an end and entice further bearish activity. Secondly we have a descending triangle formation which should this formation complete the measuring objective would come in at 1240 which coincidentally is the 76.4% retracement of the move, taking price back to levels not seen since June and confirming the break of the uptrend from latter last year. 

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