Last week I wrote how the GER30 was setting up to tackle its overhead resistance once again. The 16,300-16,400 levels were hit four times since mid-November 2021 and each time price was repelled. However, this time there are signs that the bulls may overpower the key level.
The red candle, labelled 2, is a complex reference candle. It has the lowest low in a five-candle cluster (red ellipse). We conservatively used candle 4's high as the measure to complete the bullish reference candle reversal (green horizontal line). Last week's candle (5), moved and closed above candle 4's high, completing the pattern.
It is useful to keep an eye on these patterns because, although they do not all result in swings, all swing start with a derivation of a reference candle reversal. This has taken price above the overhead resistance area, with price now trading around the 16,450 level.
1. Price is above the black 30-week EMA, and the EMA is bullishly pointing up.
2. The RSI is above 50, which is the bullish side of the oscillator.
3. Last week's candle completed a bullish reference candle reversal.
ECB Monetary Policy
Christine Lagarde told Le Figaro newspaper that at the next meeting in September, "there could be a further hike of the policy rate or perhaps a pause" but that "A pause, whenever it occurs…would not necessarily be definitive." This comes after last week's ECB meeting which had dovish undertones, where President Lagarde stressed that decisions will be data dependent.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.