DAX Remains Strong, And So Does Oil

From Europe, the European Commission downgraded the Euro area GDP for 2021 but keeps an upbeat tone for 2022 and remains optimistic. Unsurprisingly, this supported the Euro pairs as the EURUSD reached a high of the week close to the 1.2150 area.

However, the week is not over yet, although there are no significant events left in the London and New York sessions. After the U.K. data, mostly positive, came out earlier today, one can simply ignore the rest of the events on the economic calendar.

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Markets to Watch

This week traders and investors followed some major themes in the market. First, the Dax’s index inability to distance itself from the 14,000 level raises eyebrows regarding future strength. Second, the AUD/USD pair marched higher all week despite the RBA’s dovish tone and forward guidance. Third, the gold price lost the fight against horizontal resistance, something that may affect other dollar markets soon.

Dax

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The Dax index struggles at the 14,000 points, and the more it does so, the weaker it looks. Unless we see a move above recent highs in 14,140, the German index may form a double top pattern. A double top resembles the letter M and after completion, it still has some more room to go to the downside.

While it is too early to say that a double top is in place, the 14,000 level, the round number, is pivotal. On a failure to hold above, the pressure will build to the downside.

AUD/USD

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It is not by chance that we have the Aussie pair here as the second market of choice today. The price action from the lows started on Election Day, November 3rd, 2020, in the United States. That is the moment the move higher in the U.S. stocks began as well, and the AUDUSD chart shows just how closely correlated the markets are.

Just like the Dax is in danger of putting a double top, the same goes for the AUDUSD pair. Only here, the pivotal level is not a round number, but the 0.76 area that acted as both resistance and support in the past.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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