The Daily DAX30 chart below may appear confusing at first, but it's worth taking some time to find the “clarity”. Is this case of a metamorphosis from one textbook formation to another? We think so.
Getting to the point: The formation starts with an inverse head-&-shoulders (bullish) formation, highlighted by the blue letters (L1, H1, N1, R1) and its corresponding objective near 12,655 (O1). The 12,655 objective then initiates a head-&-shoulders (bearish) formation, highlighted by the yellow letters, which is currently breaking its neckline. For the tradable implications of this formation and other trades, please tune in to today's video, prepared for our Premium subscribers "Onto & Beyond the Fed Decision"
Does it appear too good to be true? If valid, the current formation suggests an objective near 11850s. Would this be achieved this week once markets are dissatisfied with a mere 25-bp rate cut from the Fed? European markets are already somewhat disappointed by the lack of new information from Draghi last week. With regards to that 12650 high reached at the start of July, we predicted it 3 months earlier in this post.
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