Brexit Day 4 the uncertainty continues. The US stock markets both closed below the key 200 DMA yesterday, normally a signal for further sell–offs and a bearish market ahead. However, following a lackluster session in Asia there was short-covering on GBP, commodities and European bourses this morning which prompted me to look for a similar bounce from oversold on US stocks.
The USA500 had breached both the 200 DMA and the powerfully psychological support at 2000.00 to close at 1990.67. The overnight retrace was significant with the 2000 level offering support. The oversold Daily time frame and pin bar entry on the 1 hour time frame provided a simple Target 1 at 2022 and Target 2 at 2042. Target 1 was reached shortly after the US stock markets opened today.
I explained the approach during today’s live analysis webinar together with the importance of risk management and always doing what is probable.
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