Head & Shoulders triggered on Dow, S&P and DAX Indices

It’s rare for me to comment on Indices here but I do occasionally trade them and do include them as part of my weekly round-up.

I’ve been watching these set-ups mature over the last few weeks and this week they have triggered. (I did have earlier entry signals but will keep it simple on this post.) There’s been plenty of volatility over the last few days & weeks so it’s no surprise to  get such a move.

I’m going to start with the Dow Jones 30. The reason being that if you look at the chart you should hopefully be able to see a Head & Shoulders formation.

Now I’m sure that I will get a sackload of comments from pedantic technical analysts who will point out to me that what we have here is not a classical H&S pattern as the right shoulder is higher than the left shoulder. (I seem to recall that in a classical H&S the right shoulder should be lower on the basis of ebbing momentum before price rolls over etc).  Anyway all I can do is trade what I see. And I see a H&S. Furthermore the fact that it’s being replicated on both the S&P and the Dax gives me confirmation.

Doing a quick price projection would give us a target of the region of 10770 – 10800 based on the distance between the head and the neckline. Lets see what happens.

Moving onto the S&P below hopefully you can see the same Head & Shoulders pattern. Yes the Right Shoulder is slightly higher but I would still call that a Head & Shoulders formation? Based on a break of the neckline which occurred this week a projected target would be 1141. As always we just have to wait and see.

Finally we have the German DAX to look at.

 By now I hope you can see the Head & Shoulders set-up.  There is a rather aggressive neckline if you use the diagonal trendline however there was a nice horizontal support line around 6990 which has broken and I have taken that for a projection which gives a price of approx 6350, which is also a previous resistance line so may well make a good area of support.

Anyway I hope you found this useful.  Will those indices retreat to those projected levels?  Who knows? I genuinely have no idea. All you can do is sit and wait and watch them play out. It’s been a volatile few days but as always there are opportunities out there for people so long as you remain patient, plan your trade and trade your plan.

Until next time I wish you the best of luck with your own trading.

FXTraderPaul