Correction Time

On most of the assets that does not change the long-term situation but on some, it may be a start of a bigger reversal, which may be continued for the next few weeks.

As an example of the second group I give You Gold. The price created the double bottom formation and is now trying to break the neckline of this pattern. What is great here is that this neckline is in the same time the neckline of the much bigger head and shoulders formation and is in the same area as the lower line of the symmetric triangle. Those two were previously strong supports and now, play role of a crucial resistance. Price closing a week above the blue and black lines will give us a proper buy signal.

USDCHF stopped the surge and it seems that is ready for a bearish correction. The aim for the correction is on the green and black line – horizontal and dynamic support respectively. Sentiment here is still ultra-positive.

Last instrument is the NZDCAD, where the price is creating a strong bullish weekly candle – hammer. This candle is being drawn on the neckline of the double top formation, which my stop the bearish plan, at least for a while. The sentiment is still negative but the major sell signal will be triggered, when the price will break the lows of the hammer candle. As long as we are above, the bullish correction is the most favorable scenario.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis