AEX working out a Daily Higher Low, continuation of the uptrend?The AEX and other European indices have lagged behind their American counterparts in recent weeks. Is this a lasting trend, or will the European indices also resume their upward path?
The price movement of the AEX shows a corrective move on the Daily chart from the All-Time High reached last summer. So far, it appears to be a corrective move in the form of an ABC pattern, and as long as the price doesn’t close below the Daily Demand Zone, this scenario remains valid. The most likely outcome is still an upward movement, whether strong or weak.
The Daily downtrend from the red B point displays a series of lower lows (LL) and lower highs (LH), indicating that we are still in a downtrend:
When this pattern is broken, we’ll have confirmation that this downward movement is part of a corrective move rather than a larger downtrend.
On the Hourly chart, we can assess this movement more closely:
Since a downtrend doesn’t break previous highs (continuing to make LHs and LLs), the probability increases that a downward movement is completed when a previous high (LH) is breached. I’ve marked this area as the Hourly Supply Zone. A close above this level would indicate that the downward move is likely complete, suggesting that the corrective downward movement has also concluded.
The most probable scenario, therefore, is that the current downward movement is nothing more than a corrective pullback within the larger uptrend, which should lead to another upward movement once the correction is complete.
This scenario remains valid as long as the price doesn’t close below the Daily Demand Zone.
