DAX (EU leading index) - Promising short term inverse H&S

2018年4月27日

In a previous post on the DAX I emphasized a very bearish stance regarding the DAX on the mid term. I still stand by that thesis completely. However, in the short term, there is an inverse head and shoulders forming, which would - if the neckline were to be broken - give us around 13.200EUR as a break-out target (probably a bit too high, looking at the left shoulder of the long term graph - see further). This is especially interesting if we take into account the mid-long term, as I'm actually bearish on the overall graph. By this, I mean that this short term pattern will allow me and you to get out of our DAX positions (or similar/other EU indexes) with some additional profit.

Looking at the short term graph, we clearly see an inverse head and shoulders. The weekly is very very clear on that (see graph of the post above), but also on the daily we see something similar (albeit, indicators here are somewhat bearish on the shorter term, likely in order to complete the shoulder).

Yet, looking at the weekly, we see a clear bull cross in the MACD and upward momentum building in the RSI. This confirms / increases the odds of the inverse H&S scenario panning out.



Now, that's the short term, and I believe we will be able to make some profits out of this figure, but the longer trend is definitely bearish, with the BIG bearish head and shoulder figure clearly being formed ever since I mentioned it in my previous post almost 2 months ago.

Post of March 2:

See the three red circles showing the head and shoulder figure on today's chart:



Also note the double top in the head!

For more background on my longer term stance, very thoroughly explained, please refer to my previous post.


Conclusion:
- Short term inverse head and shoulders, allowing us to take some additional profit when exiting our positions, as we will have to exit them in my humble opinion, because we have a big head and shoulders figure, are at the top of the long term trend channel, and even see a double top. That's almost textbook, so the odds are in favor of that bearish scenario.
- Good luck with your investments and with your trades.
- A thumbs up on the post is very welcome if it helped you out, you found it interesting, gained you a million bucks :-)

2018年5月8日

注释

Break-out of the neckline, very visible on the weekly chart and as predicted:


Momentum remains positive (RSI upward) and MACD is still just forming its golden cross, so that 13,2K might even be possible.

The daily hints to some consolidation first:

2018年5月22日

注释

Perfectly touching the break-out target ;)

2018年5月28日

交易结束：到达目标

FYI - I got out at the break-out target (placed my orders just underneath). As you can see, we have already made a bounce back. Given the overall longer term view on this chart, I believe the risk / reward ratio is too high to keep any long positions in this one. I'll remain on the sidelines, waiting for the inevitable correction (and yes, this can still take months before unfolding, we still have to build further on that right shoulder). Short term market exuberance could also (odds are relatively low) push price temporarily higher, but that's just postponing the downward correction.)

2018年5月28日

注释

Zoom-out of the graph (clickeable link)