DAX - Potential Short Setup & Long Term Overview
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The DAX Index has triggered a picture book Head and Shoulders pattern with a target at around 10100. Right now, the DAX could retrace back up to test the neckline which should act as strong resistance. If this happens then going short at the neckline resistance is a viable option with good risk-reward.
10100 is the main target where shorts should be covered. The area around this price level is also the 0.382 Fibonacci-Retracement level of the long-term bull run which started in 2008. Here we find lots of historic price action and this will likely act as a support zone, if the price goes there. We can think about long entries at this point.
Looking at the long-term, we don´t expect the DAX to make new highs any time soon. It´s more likely that we find a range and, at one point, break the 0.382 support and retrace to even lower Fib-Levels where we would find strong demand.
We need to allow time for this to play out.
10100 is the main target where shorts should be covered. The area around this price level is also the 0.382 Fibonacci-Retracement level of the long-term bull run which started in 2008. Here we find lots of historic price action and this will likely act as a support zone, if the price goes there. We can think about long entries at this point.
Looking at the long-term, we don´t expect the DAX to make new highs any time soon. It´s more likely that we find a range and, at one point, break the 0.382 support and retrace to even lower Fib-Levels where we would find strong demand.
We need to allow time for this to play out.
Note
Ok, the DAX did not rally up to where we would have liked to short and instead continued to go lower.It looks like it could make it´s way down to the .382 area. Shorting is still considered, but not before a pullback up to test some significant level...
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