Dear traders,

Last time I wrote a trading analysis on DAX.

In-between, I shared with you my thought on the bearishness of the markets at the moment.

You can check this out HERE.

So far, indices globally have been falling down.

It is not a big surprise to me considering the previous articles I have written on the topic.

The major question one should ask (and the one time only knows the answer) is whether this would materialise into a long-term reversal.

Currently, it is still early to say, but the signs are there.

Dow Jones Trading Analysis 06.12.2021

Why do I think that things would take a different shape?

Is there another bearish sign?

By looking at the Dow Jones index, I can see two worrying sings:

  1. Price has bounced back from a major supply zone
  2. There is an inside day candle on the Daily chart

Used in combination, those two can bring a very powerful negative surprise to the market.

In other words, this might lead to further selling.

I will be waiting for tomorrow’s open to see where prices will be.

Ideally, I would like to see them coming back up to 34800 and then printing a confirmation signal on the 4H charts.

A confirmation might come in the shape of an inverted pin bar or a bearish engulfing pattern.

Or why not an inside bar?

Until then, I will be staying on the sidelines and waiting for that pattern to occur.

There is always a chance to see price rebounding up.

An alternative scenario is seeing the price dropping to 34000 and then printing a reversal candlestick formation.

Then, we might see a lot of traders going long and continuing the uptrend.

So, whatever you do, be careful and have those two scenarios on mind.

Happy trading,

Colibri Trader