Three weeks ago (February 20, see chart below), we gave a major Sell Signal on DAX (DE40) as the price was about to get rejected near its recurring Lower Highs pattern:
What followed was a massive sell-off that easily hit our 24000 Target and even pierced the 10-month Support Zone. The key development though was the market's first 1W candle closing below its 1W MA50 (blue trend-line) in almost 2.5 years (since the week of November 06 2023). Even the Tariff War correction last year managed to close above the 1W MA50 despite breaking below it on the same week.
So far the whole structure with the current price action and the Higher Highs pattern that preceded the sell-off, resembles the build-up to the 2022 Bear Cycle. Notice how despite the Higher Highs sequence on both fractals, their 1W RSI was on Lower Highs, i.e. a Bearish Divergence that was an early signal of what was about to come.
The 1W MA50 break-out on the 2022 Bear Cycle took place on the January 31 2022 candle, which was the first to close below it in months. Even from the 1W RSI perspective we are on the similar 43.50 level. If DAX now follows that exact structure, then the 1W MA50 should turn into Resistance for the entirety of the Bear Cycle and push the price below the 1W MA200 (orange trend-line).
In fact, the 2022 bottom was priced just below the 0.382 Fibonacci retracement level from the previous market bottom (COVID crash bottom) and the 1M MA100 (red trend-line) after completing a total -27.55% decline from the Top.
As a result, the potential Bottom Zone should be within 19000 (Fib 0.382) and 18500 (-27.50% total drop).
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Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
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What followed was a massive sell-off that easily hit our 24000 Target and even pierced the 10-month Support Zone. The key development though was the market's first 1W candle closing below its 1W MA50 (blue trend-line) in almost 2.5 years (since the week of November 06 2023). Even the Tariff War correction last year managed to close above the 1W MA50 despite breaking below it on the same week.
So far the whole structure with the current price action and the Higher Highs pattern that preceded the sell-off, resembles the build-up to the 2022 Bear Cycle. Notice how despite the Higher Highs sequence on both fractals, their 1W RSI was on Lower Highs, i.e. a Bearish Divergence that was an early signal of what was about to come.
The 1W MA50 break-out on the 2022 Bear Cycle took place on the January 31 2022 candle, which was the first to close below it in months. Even from the 1W RSI perspective we are on the similar 43.50 level. If DAX now follows that exact structure, then the 1W MA50 should turn into Resistance for the entirety of the Bear Cycle and push the price below the 1W MA200 (orange trend-line).
In fact, the 2022 bottom was priced just below the 0.382 Fibonacci retracement level from the previous market bottom (COVID crash bottom) and the 1M MA100 (red trend-line) after completing a total -27.55% decline from the Top.
As a result, the potential Bottom Zone should be within 19000 (Fib 0.382) and 18500 (-27.50% total drop).
---
** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. **
---
Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
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I trade Crypto, Forex, Indices & Commodities on PrimeXBT — all from one account with TradingView charts 👉 tradingshot.short.gy/PrimeXBT
I also use TradeNation for fixed spreads & zero commission 👉 tradingshot.short.gy/Tradenation
I also use TradeNation for fixed spreads & zero commission 👉 tradingshot.short.gy/Tradenation
Wyłączenie odpowiedzialności
Informacje i publikacje nie stanowią i nie powinny być traktowane jako porady finansowe, inwestycyjne, tradingowe ani jakiekolwiek inne rekomendacje dostarczane lub zatwierdzone przez TradingView. Więcej informacji znajduje się w Warunkach użytkowania.