DAX will FLAG and /or H&S targets be met?

DAX 3 hr charts

On 15/5 DAX broke down through support at 6420, which could also be construed as the neckline of a Head and Shoulders formation with a target near 5850.

Since May 16th DAX has been range bound 6220 to 6430.

Which way will it break?

Scenario 1 FLAG target at 6035
Scenario 2 Head and shoulders target at 5850
Scenario 3  market rallies from the consolidation, invalidating both of the above.


Rangebound action doesn't favour Head and shoulders normally more impulsive once the neckline is broken and retested.

DAX and FTSE update

Yesterday's rally was a bear rally.

strong, low volume, and serves to:

a. stop out the shorts
b. suck in the longs.

DAX

recently has been holding up pretty well, but not out of the BEAR woods YET..
A test of the lows at 6225 and a hold could be a nice BUY (tight stop)

IF it breaks the lows then we could see a PANIC move down to 6k or 5870
Nimble trading necessary as if it approaches the lower levels would be good LONG opp

FTSE

Similar to the DAX but with a clearer down move from the highs
Blew past the FLAG target (interesting that yesterday's rally went TO THE FLAG target)

5260 recent low WATCH this level !!
below targets:


5180 is the H&S target
5020 is KEY support
and below 4850


Unlikely to get to the lowest target, and at 5180 flattening out the shorts!
Below that look for longs

Weekend work

Sentiment wise the bull rally has been dominant since late 2011, and sentiment seems that EVERYBODY is looking for a pull back to buy again, so my CONTRARIAN thinking cap says the pull back will be DEEPER than people expect to SCARE the BULLS....after a drop of just over 1 % for the DOW, already seems like the BULLS are ALREADY sniffing at the LONG side...

The FTSE and the DAX charts show the possibility of the SCARY fall which would then justify going LONG again in anticipation of  new highs.

After a weak close Friday and possibly the start of short to medium term down trend a look at possible targets:

FTSE daily

Chart shows that 200 dma has been a key level for the last 2 years.  
Friday's action looks like breaking the up trend in force since October 2011

First target 200 dma at 5562
If that fails or bounce is weak, FLAG target is 5390/5400

If it rallies strongly and breaks above flag top NEW HIGHS likely.

DAX daily.

2 bearish formations in play

A. Head and Shoulders (NOT CONFIRMED)  if breaks 6460 level then target is 5875
B.  Flag (Confirmed) targets 6035

DAX end of week look

DAX weekly looks to be close to a critical level; 6470, a break below and the UPTREND will be broken.  This could induce a short (in time) but sharp (in price) sell off which would

a. deflate the bullish sentiment
b. encourage the bearish sentiment.

Keep eye on sentiment , when the bearish side gets too noticeable, be ready to reverse and BUY!

For now sell rallies stop above 6785..or drill down to lower time frame for lower stop levels.

eg 30 min chart

AUDUSD daily

After falling from 1.085, recent action looks like consolidation of the move down, or a BEAR FLAG

Possible targets for next leg down (IF bear flag is confirmed)

Dax daily

Well if the count is correct looks like we are close to finishing, but I would expect some sort of panic move down and recovery to signal the downside has ended.

The bullish scenario:
The 200 dma is at 6190
Or a sharp 100 point drop and recovery..the UP UP and AWAY

The bearish scenario..
The DAX has already topped @7180 in March and we are now in a wave 1 and a wave 2 (abc correction) will occur when this down move is finished.

EITHER way it looks like the next decent move will be up...

The only CAVEAT is that the DOW looks like it should have quite a bit more downside left..

DAX 2 hr chart

DAX 2 hr chart showing bear flags, just breaking another one..start of move down in 5th wave to 6450?

Crude oil..still consolidating or forming a top?

Crude oil still in a channel...trending lower, BUT is it a bull flag or topping?

Daily chart

Personally it looks like after the bottom formed in Oct 11, which showed bullish divergence between Price and RSI, we had a STRONG LEG up  to the November high, and since then it looks like it is in consolidation for at LEAST one more leg higher.

A significant break of the December lows would change that

STRATEGY if bullish : buy on weakness, or wait for a break above 101

Weekly chart


RSI seems to have found support, only negative is MACD may be about to cross down, BUT lagging indicator and many time it approaches the signal and turns up.

DAX 4 hours...bigger picture

Well the negative news seems to not be able to drive the market significantly lower SO it seems that it will go higher...

Looking at the DAX 4 hr chart 2 scenarios

THE BEARISH CASE
possible H&S pattern with neckline at around 5730 (tested yesterday) and a price target of 5000 (September lows)

THE BULLISH CASE
We moved up from 23rd Sept low and have now retraced 50% of the move up (A to B), and could be in a bull flag formation, and pretty close to a break out to the upside (6000), with a min target of 6600 and possibly even as high as 7200..

LONG TERM
If we completed a wave 1 down at the Sept lows and we are now in a wave 2 up, wave 2's tend to bring back that bullish feeling and can even approach the highs, before we turn down in a WAVE 3 ..THE BIG ONE!!

DAX 4 hr chart

SO a Xmas rally and into New Year before the next wave down occurs..

DOW...flag? parallelogram

DOW 2 hr chart shows a potential flag/parallelogram if it breaks down target 11800.. IF !

AUDUSD weekly..

Bear case..I like the 23 week ma moving below the 50 week ma ..just...waiting to see if we get a more decisive move down..or if this is consolidation for a move higher...

We could be forming a bear flag for the next move down in which case I expect a break of the "flash crash" lows around 80..

if we are in a bull run a move above 89/90 means new highs or at least a test of the old highs

CABLE 8hr flag broken?

Looks like cable has made up it's mind which way to break (after a nice head fake yesterday when it traded up to 1.5830),  the RSI has also broken the trend up, and MACD is starting to turn down.. NEXT level to break if we are to get a sustained move is 1.5500.

medium term targets?  There are 2 possibles depending where the "flag pole" started.
How to measure a flag formation click  here.

1
taking high on 19/1/10       16458
taking the low on 8/2/10    15534   subtracting gives us 924 pips

break today at 15687 - 924 = 14763

2 taking the high on 3/2/10 16069
     taking the low on 8/2/10 15534 subtracting gives us 535 pips

break today at 15687 - 535 = 15152

Here's a look at the 4 hr chart from the other day..cable 4 hr range (bear flag)

looking at the DAILY chart with those targets added on

Obviously if we break back into the flag significantly something else is happening...use stops!

FTSE weekly and daily..quick look at DOW

Recent action in the equity markets LOOKS corrective..ie  we have had some sharp falls and now consolidating for another leg down..BUT...as with all trading there are ALWAYS 2 possibilities (at least!).


Looking at the FTSE chart

weekly

 We had a break of the uptrend since March 09.   So at minimum we are in a corretcion of that, or now we are in a down trend.  If a correction how far can we go?  Look at the daily chart..


FTSE daily

BEAR view.  Broken up trend, Head n shoulder formation targets 4600 area.  4520 is 50 % retrace of the move up since March.

The bear view gets seriously damaged if we close above 5300.

Looking at the DOW..very near term also painting a BEAR flag, but action since 10740 has been contained in a well defined channel (BULL FLAG?)and a break above 10300 will get the bulls going again..

 200 dma is at 9510 which would be a good target for this move down 6 % lower., MACD looks like it wants to turn up...but best wait for a bullish crossover.