Charting and Triangle Trade Planning the Breakout In German DAX and EWG

May 28, 2014: 2:39 PM CST

The German DAX and related ETF EWG broke to new highs from a clear triangle pattern and we’re on “Trap or Breakout” watch as long as price remains where it is now.

Let’s update our chart and plan a few trading strategies based on the recent power-breakout:

German DAX Germany DAX Stock Market Triangle Breakout All Time Highs 52 week high

The German DAX broke an Ascending Triangle pattern in September 2013 to see a strong, continued upward impulse that lasted throughout the rest of the year.

Price compressed and formed another compression or Ascending Triangle pattern into the 9,700 index level.

In May, buyers broke the index to new highs above the triangle to trigger a “breakout play.”  The DAX is thus bullish in potential breakout mode as long as we see the index remain above the breakout level near 9,700.

Note the pullback to test (touch) the upper trendine in October after the September breakout.

Any return back under the 9,700 and 9,600 level may trigger a Bull Trap and aggressive short-sale/reversal signal under 9,600.

We can take a closer look at the breakout and price levels as seen on the similar Germany ETF – EWG:

Germany German ETF EWG Stock market trading breakout new highs triangle technical analysis

Though the price is slightly different, we can still see similarities in the triangle and breakout above the $32.00 level in the EWG fund.

A return under the upper trendline signals an aggressive short-sale/reversal set-up while a hold or sustained movement above $32.00 may lead to another continued upward pro-trend impulse.

A closer look at the intraday EWG gives us clear future-forecasting and trading parameters to watch:

DAX German ETF Germany Stock Market EWG Breakout Triangle Intraday Trading

I color-coded the intraday chart to highlight the key focal points and potential trade entry or management (stop-loss) levels.

As long as buyers hold the market above the $31.80 and $32.00 per share level, we could see short-sellers help fuel a ‘short-squeeze’ or sustained tradable breakout indefinitely higher.

Otherwise, a return under $31.80 is a “Caution” signal that may lead to an immediate retest of the rising $31.40 intraday key trendline.

A breakdown under the $31.40 and $31.30 level opens a potential breakdown and short-sale signal to target the $30.20 or even $30.00 per share ETF level.

Monitor the breakout and key trendlines and potential for a “Bull Trap” or “Breakout” impulsive play.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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4 Comments

4 Responses to “Charting and Triangle Trade Planning the Breakout In German DAX and EWG”

  1. smith digo Says:

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  4. Simson Says:

    I would disagree with Mr. Stuart as it is not expert only.
    In my view if we are determined to learn something than we can easily do it
    then it does not matter if it’s hard or easy. I also trade with OctaFX, as it
    is very common for all newbies to be trading wit. They are really one of the
    finest brokers in the world with amazing conditions like low spread of just 0.2
    pips, high leverage up to 1.500 and so much more.