Price Action – IBEX 35 Strong Breakout Bar, More Upside? Aug 16th

IBEX 35 (Spanish Bolsa/Stock Exchange)
Wanted to mix things up a bit with a different instrument today – this time the Spanish Bolsa or Ibex 35 which has broken a key resistance and double top at 7224 which I talked about on my twitter and facebook accounts ahead of time.

What’s interesting to note in the price action and chart below is the strong close for today, along with the tiny wick at the bottom – communicating buying straight from the open (conviction heading into resistance). This along with the weak 3 candle pullback from the last touch at the 7224 resistance, suggested the sellers could not muster a strong response, nor bring in other traders to their cause.

Now that the market has clearly broken through the key resistance level with a strong breakout bar, I suspect any pullbacks into this level would hold (barring any really bad news out of Spain which could happen), but if the pullback is corrective and weak in nature, then I suspect higher prices, so watch for a breakout pullback setup at the aforementioned resistance turned support.  I never thought I’d want to be long the Bolsa, but its a good lesson for traders to not let bias interfere with missing a good trading opportunity, so am enjoying the friction.

price action breakout bar aug 16th

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Global Market Commentary:
Frau Merkel tried a different mantra than her usual ‘Nein’ today, with supportive remarks about doing what is necessary to save the Euro.  This gave investors a boost of confidence the German taxpayers main funding backstop for Europe will save the sinking ships called Spain, Greece and Italy.  That combined with global traders still pricing in QE3, or some other 2, 3 or 4 letter CB easing policy, helped buoy global markets.

Housing Starts and the Philly Fed both came in lower than expectations which in turn put pressure on the USD.

Gold gained $9.70 on the day to close at $1616 while crude is pressing up against key resistance at $95.21.

Upcoming Economic Announcements:

EUR German Producer Prices (YoY) 06.00GMT 02.00EST
CAD Bank Canada Consumer Price Index Core (YoY) 12.30GMT 08.30EST
USD U. of Michigan Confidence (AUG P) 13.55GMT 09.55EST
USD Leading Indicators 14.00GMT 10.00EST

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Buddhist, Trader and Philanthropist

I'm Chris Capre, Founder of 2ndSkiesForex. I help traders of all levels change the way they think, trade and perform. As a professional trader, I specialize in trading price action. As a teacher, my passion lies in showing you how to re-wire your brain for successful trading. Want to improve your edge right now? Visit my Price Action Course page.

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  • Gabriel M

    Thanks for the article Chris,

    As I started reading the article on the Bolsa, I got to thinking…”who would want to buy Spanish equities/markets…” lol..then I read your last statement about not being biased.

    As far as the break, assuming it doesn’t follow through to the top side, and breaks back below 7224. Would this present a good shorting opportunity or would it be best to simply stay away due to the upside strength?