SP35
We are just taking a look at the IBEX 35 and not planning on opening up any positions. This trade is a bit too complicated, and there are no clear signals (because there are too many almost) to indicate which way the price wants to go.
A downward trendline from May 2017 connects a peak in February 2020. Technically from this, we can gather that IBEX is still technically in a downtrend. Even though it has dropped in price and climbed to its current position, it still has not crossed our “main” downward trendline signaling an uptrend.
There are quite a few patterns to consider in this example. We have a wedge squeezing price along with two symmetrical triangles. The grey support line indicates a hard support level which is also supported by a round number (SAR round number). Additionally, the valleys are supported by high volume, and when this is the case, you can be assured price will probably come to a halt there. Along with the downward resistance line running across the double top, that support line forms a tightening flag.
If we have to consider these patterns, we can take into consideration that a partial decline has taken place, and it has retraced to the 50% level of the Fibonacci Retracement level.
We can also see a level of HCR (Horizontal Consolidation Region) at the level of support. There is a channel to the left and above, close to the second part of the double top. Both these areas are areas that could halt price movement, but they are so close to the price already that they might not cause any problems.
In terms of the small symmetrical triangle, we can see that the price has reached its apex and some form of a break is imminent. However, if we look at the larger symmetrical triangle, we can see that the price still has room to move before we can come to any conclusion.
If we had to assume that IBEX #% was currently in an uptrend due to the fact that it has been moving up since October 2020, we could see that two trend lines cut through price. One creates the larger symmetrical triangle while the other is used to evaluate if a downtrend has begun again.
By using the 1-2-3 change method, we can see that IBEX 35 is headed in a downtrend but has not closed at the 3 mark, which is the price of 8060. Although, the double top was confirmed with the HCR.
I would not personally enter any position here until I see where the price is going to go. In order to go short, I would wait for the price to move and close below the two support lines and at the 3 mark.
For a long position, I would actually wait until it crossed the massively long downward trendline that is still a level of resistance. You can see this because it reversed when the price tried to reach it twice (the double top). The price would have to close at around 9368 for me to consider a position trading opportunity for a long position.
Hence for the moment, we’ll just sit and wait to see what IBEX 35 is going to do.