Risk Off Is Back?

All three major US indices fell yesterday more than 1% and this puts us into thinking of whether this sharp rise from December lows was just a corrective bounce or the start of a new uptrend. In this post, we take a look at their technical picture using Ichimoku clouds and simple trend lines. Yesterday’s reversal in both SPX and Nasdaq has turned me bearish. Why? Both indices reached their Daily Ichimoku cloud resistance levels and got rejected.

SPX did not manage to break above its downward sloping trend line resistance while NASDAQ most probably made a fake break out.

In Europe the German DAX also reached the Kumo (Cloud) and got rejected. We have the same bearish sign here as well.

Most indices have started a pullback. This pullback is very important. Bulls will be looking for a higher low to be created and eventually to break above recent highs. On the other hand, bears will expect this pullback to unfold into a bigger decline and into a new downward wave for new lows. Risk reward favors bears for now.

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