Top three charts of the week: US500, OIL, DE30 (20.10.2021)

OIL

Let’s start today’s analysis with the oil market, which has been trading in a strong upward trend recently. However, looking at the H4 interval, we can see that buyers reached the key long -term resistance area near $85.5, marked with 2018 highs, as well as 161.8% Fibonacci exterior retracement of the recent downward correction started in June 2021. OIL failed to break above it during the first test, increasing chances for a downward correction to occur. In such a scenario, one should pay attention to the lower limit of Overbalance structure which is the first key support. Breaking below could trigger a downward movement towards the $82 area, which is additionally strengthened by the previous price reactions and 100-period moving average.

OIL H4 interval. Source: xStation5

US500

Next, let’s move to the US stock market index - S&P500 (US500), which is trading near its ATH. Taking a look at the H4 interval, we can see the recent downward correction stopped near 4,226 pts and the index resumed the main trend, which is upward. The price broke above the downward trendline (blue dashed line) and the local resistance levels at 4,438 pts and 4,488 pts, which should be considered supports now. If the current sentiment prevails, the upward move could reach the zone at 4,547 pts in the near future. Moreover, according to the Overbalance strategy, breaking above the aforementioned 4,438 pts area is also a potential bullish signal, confirming that the sentiment reversed upward.

US500 H4 interval. Source: xStation5

DE30

Last but not least, let’s take a look at the German index - DAX (DE30). In spite of painting a large head and shoulders pattern, sellers did not manage to break below the neckline of the pattern, and a reversal started. Looking at the D1 interval, we can see buyers manage to break above the downward channel, signaling a return to the main upward trend. Should the price stay above the 15,450 pts support, one may expect the price to continue to rise. The nearest key resistance area is marked with the shoulder line of the aforementioned SHS pattern at 15,770 pts. On the other hand, returning below the 15,450 pts area may be a chance for bears to take control over the market.

DE30 D1 interval. Source: xStation5​​​​​​​