Hi Traders! Dax short term forecast follow up and update is here. On January 6th I shared this “Dax Short Term Forecast And Technical Analysis” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
Looking at the H1 chart, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed at 16201.80 and the second high that has formed at 16287.30 based on the MACD indicator. The price then moved lower and broke below the last low at 16076.80 thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a correction is happening. In addition to this, based on the Stochastic Oscillator we could see that the price has reached its extreme which we may consider as yet another evidence of bearish pressure. Until the H4 key resistance holds my short term view remains here and I expect the price to move lower further.
Dax H1(1 hour) Chart Current Scenario
In Dax, based on the above-mentioned analysis my short term view was bearish and I was expecting the price to move lower further until the H4 key resistance zone holds. After the bearish convergence the pullback that I was looking for happened but most importantly the price was holding below the H4 key resistance zone and also there were no signs opposing this short term bearish view. Also, based on the Stochastic Oscillator we could see that the price has reached its extreme at that time which we may consider as evidence of bearish pressure. The price then moved lower further as I expected it to and delivered a fantastic move to the downside as you can see in the image below.
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action accordingly.
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Traders Academy Club Team