As hinted in our previous reports that buyers must be cautious as bears may enter the market anytime soon, and so they did. The majors fell against the U.S. dollar yesterday as the European Central Bank pointed out that it may further consider dropping the interest rate down if the need seems to be there. Moreover, the biggest news of yesterday was from the side of Federal Reserve that hinted about the tapering which may be done in upcoming months provided that the economic indicators show a good outcome.
Wall Street down the Hill
The Wall Street witnessed sharp decline all of a sudden where the S&P 500 index fell instantly from 1792 to 1781, where this support level was further broken and the market managed to test 1773 before the closing of the trading session on Wednesday. Call it rumors, call it manipulation, or call it intuition. The market works on sentiments and the fundamentals automatically follow such sentiments, leading the forecasts to be true.
The metal dropped instantly where it gave the downward spike and tested 1250 the time when this news came out, but later on it broke that 1250 level too and went on to test 1240 where investors do not find it attractive enough to invest it.
This is a cyclical trend and happens almost every year, where the U.S. dollar gets stronger by the end of every year; at least I have been seeing this ever since I started trading. And this is what exactly I hinted in my previous reports that the market would start falling so traders are advised to sell on tops. Bearish potential is there, as the market has made unexpected tops whether we talk about the Wall Street or major currency pairs, but a healthy correction is now starting and we can see them dropping down further till December. Therefore, buyers must remain very cautious before entering the market, plus investors are eying on the U.S. fundamentals where each good outcome could extend the gains for the U.S. dollar and take Wall Street and major pairs down.
To contact the reporter of this story: Jonathan Millet at firstname.lastname@example.org