Short-Term Bearish Trade Setups Identified on DAX Daily Chart
Updated
Bearish Opportunity Emerging as DAX Forms Bullish ABCD Pattern
The long-term trend since 2022 remains downward based on lower highs and lows. However, the short-term trend has turned neutral/flat.
Support: 15660 (previous low), Resistance: 16150 (21-day EMA)
Moving Averages: Price is trading above the 50, 100 and 200-DMA, indicating a potential trend change.
Recent action: The DAX has bounced off 15660 support and is currently consolidating below the 21-DMA resistance.
There is a bullish ABCD pattern currently forming on the DAX daily chart:
Point A: 16029
Point B: 15573
Point C: 15893
Projected Point D: 15499
This is a bullish continuation pattern that typically resolves with a move higher past Point D. However, in this case, it seems the DAX may have trouble breaking above the downward resistance trendline.
Recommendation:
Given the context of the longer-term downtrend still intact, traders could look to short the DAX on a close below Point C at 15893, targeting the projected Point D low of 15499 or traders could wait for a break of the 16150 resistance to then look to enter long positions. Alternately, a break below 15660 support would suggest renewed downside momentum.
Entry: Short on close below 15893
Stop Loss: Above previous high at 16029
Take Profit: 15499 (projected Point D of ABCD pattern)
Adding the technical details of the forming ABCD pattern provides additional validation for entering a short position at current levels, with the goal of profiting from the completion of this bullish reversal pattern turning bearish given the longer-term bearish biases still in play.
Please share your thoughts below
The long-term trend since 2022 remains downward based on lower highs and lows. However, the short-term trend has turned neutral/flat.
Support: 15660 (previous low), Resistance: 16150 (21-day EMA)
Moving Averages: Price is trading above the 50, 100 and 200-DMA, indicating a potential trend change.
Recent action: The DAX has bounced off 15660 support and is currently consolidating below the 21-DMA resistance.
There is a bullish ABCD pattern currently forming on the DAX daily chart:
Point A: 16029
Point B: 15573
Point C: 15893
Projected Point D: 15499
This is a bullish continuation pattern that typically resolves with a move higher past Point D. However, in this case, it seems the DAX may have trouble breaking above the downward resistance trendline.
Recommendation:
Given the context of the longer-term downtrend still intact, traders could look to short the DAX on a close below Point C at 15893, targeting the projected Point D low of 15499 or traders could wait for a break of the 16150 resistance to then look to enter long positions. Alternately, a break below 15660 support would suggest renewed downside momentum.
Entry: Short on close below 15893
Stop Loss: Above previous high at 16029
Take Profit: 15499 (projected Point D of ABCD pattern)
Adding the technical details of the forming ABCD pattern provides additional validation for entering a short position at current levels, with the goal of profiting from the completion of this bullish reversal pattern turning bearish given the longer-term bearish biases still in play.
Please share your thoughts below
Note
Keep holding, we're almost there!Trade closed: target reached
Take Profit Hit (TP HIT)Trade closed: target reached
Take Profit Hit (TP HIT)
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