It all comes down to Higher-Lows to maintain this current trend

The last couple of trading days have been catastrophic for bullish traders, as the major indices and currency pairs have retraced severely after touching major resistance levels. U.S stocks experienced further selling pressure yesterday as a combination of profit taking and economic data forced the indices down to lower levels.

This time round it was housing data that battered trader’s confidence as the results showed that sales of new homes slid by 3.6%. The news was completely opposite to what analysts were expecting and dropped to 402k in September. Furthermore MBA Mortgage Applications showed a decrease of -12.3%. Even though durable goods showed a positive result during pre-market hours, coming out as expected, the data was quickly brushed aside throughout the start of the session.

From a technical point of view, one can see on the chart that investor’s sentiment has flip-sided over the last couple of trading days. Even though support levels are failing to hold, the major indices are still trading above their prior lows. The form of a higher low on the indices would confirm that the current trend is still intact.

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