Bearish Engulfing Candlestick Pattern Ignites an Ending Diagonal Triangle In The German DAX Index
Oftentimes, the DAX prefigures price action in the "blue chip" USA stock Indexes.
I don't know of anyone who knows for sure why it happens, but it does, not necessarily the very next day.
Now we see a very interesting pattern which has just completed in the DAX.
This is an "Ending Diagonal Triangle," which is always the next-to-last pattern, typically before a High of such import that it is expected to stand unchallenged for a substantial amount of time.
Sometimes, this pattern is set off by a Candlestick reversal pattern such as the "Dark Cloud Cover" or, in this case, by a Bearish Engulfing Pattern.
The "Ending Diagonal Triangle" is composed of five waves - a, b, c, d, and e.
After the "e" wave is complete, we expect that prices will break out above the triangle to a new High, to be followed by a strong downside reversal.
In this instance, prices have broken out above the triangle during the last three days and have set a black Candlestick today, which means that prices closed lower than the open.
This is a bearish signal, which foretells the possibility of lower prices in future days.
By way of confirmation of the bearish connotation of the pattern, we also see today the formation of a "Pinch" between the ADX Indicator and the Stochastics Indicator lines.
This conformation is a nearly 100% accurate clue that prices are about to decline.
The RSI is at an extreme, as well, which is bearish.
The Ending Diagonal Triangle can be seen more clearly on the "prices only" chart, attached.
The beginning of the triangle (at its upper left corner) was marked by a tall black Candlestick whose "Real Body" bearishly engulfed the "Real Bodies" of the four preceding price bars.
The bearish prediction of that pattern proved to be accurate.
Now, following the completion of the Ending Diagonal Triangle, we will watch with interest to see whether its bearish promise is fulfilled this time.
William Kurtz http://www.
candlesticksforbrighties.
com
I don't know of anyone who knows for sure why it happens, but it does, not necessarily the very next day.
Now we see a very interesting pattern which has just completed in the DAX.
This is an "Ending Diagonal Triangle," which is always the next-to-last pattern, typically before a High of such import that it is expected to stand unchallenged for a substantial amount of time.
Sometimes, this pattern is set off by a Candlestick reversal pattern such as the "Dark Cloud Cover" or, in this case, by a Bearish Engulfing Pattern.
The "Ending Diagonal Triangle" is composed of five waves - a, b, c, d, and e.
After the "e" wave is complete, we expect that prices will break out above the triangle to a new High, to be followed by a strong downside reversal.
In this instance, prices have broken out above the triangle during the last three days and have set a black Candlestick today, which means that prices closed lower than the open.
This is a bearish signal, which foretells the possibility of lower prices in future days.
By way of confirmation of the bearish connotation of the pattern, we also see today the formation of a "Pinch" between the ADX Indicator and the Stochastics Indicator lines.
This conformation is a nearly 100% accurate clue that prices are about to decline.
The RSI is at an extreme, as well, which is bearish.
The Ending Diagonal Triangle can be seen more clearly on the "prices only" chart, attached.
The beginning of the triangle (at its upper left corner) was marked by a tall black Candlestick whose "Real Body" bearishly engulfed the "Real Bodies" of the four preceding price bars.
The bearish prediction of that pattern proved to be accurate.
Now, following the completion of the Ending Diagonal Triangle, we will watch with interest to see whether its bearish promise is fulfilled this time.
William Kurtz http://www.
candlesticksforbrighties.
com
