we now have a GREAT opportunity to see if the 10000 level holds on the German Dax. I blogged about it here: http://bartscharts.com/2014/12/14/german-dax-voo-doo-is-a-wonder-to-behold/ and at the time it was finishing a MONUMENTAL pattern from the all time low 30+years ago. Guess you could say it “worked” because it held the market at that level for over a year and then it exploded higher earlier this year.
now, one of the “axioms” of PATTERN recognition is when a PATTERN fails (which it ultimately did a year later) the market will, invariably come back to touch it and then continue in the direction of the break.
yes, I know, sounds CRAZY but as a PATTERN dude, you HAVE to TRADE WHAT YOU SEE not WHAT YOU BELIEVE .. what do we have?
A PERFECT pattern on top of a former long term pattern …this is what we SEE:
- .618/.786 overlap retracements
- 1.618 extension
- projection into the area
- measured moves w/ the projection (note the blue arrows)
- ALL ON TOP OF A FORMER PATTERN
so, time for the IF then …
- IF this pattern holds then the German Dax should move higher …. perhaps even taking out the old high. I know that belief is crazy .. but it’s what I see.
- IF THIS PATTERN FAILS – it ranks up there as a “big deal” and is VERY VERY significant? Why?
- In a very strong UP trend PATTERN dudes ALWAYS trade the first pattern int he direction of the trend.
- In a directional change – that first pattern will usually fail and then, well, it’s not good so to speak and the correction will go much deeper than “they” expect.
- In a very strong UP trend PATTERN dudes ALWAYS trade the first pattern int he direction of the trend.
So, knowing that, yes, the global market is connected believe this is a VERY good proxy to see if the support holds … if it does, then believe we’ll carve out a support zone in the US markets and others ….
Stay tuned and let me know if you have any questions.
B
