The IBEX 35, in its hourly chart, shows the breakdown of an ascending wedge, which gives us a signal of exhaustion of the short-term bullish sequence started on January 31st at 9,334 pts.
On the other hand, the bearish divergence exhibited by the oscillator confirms the exhaustion signal of the ascending wedge pattern. However, divergence is not a guarantee of the reversal movement; it requires confirmation by price action.
A short position will activate if the price breaks and closes below 9,972 pts, just below the last low of the ascending wedge. In our conservative scenario, the Spanish index could drop until 9,866 pts. If the market action increases its bearish momentum, the IBEX could extend its falls until 9,759 pts, and even plummet till 9,563 pts.
The invalidation level of our bearish scenario is placed at 10,104 pts, which is slightly above the last top of the short-term upside.
Trading Plan Summary
Entry Level: 9,972 pts.
Protective Stop: 10,104 pts.
1st Profit Target: 9,866 pts.
2nd Profit Target: 9,759 pts.
3rd Profit Target: 9,563 pts.
Risk Warning: CFD and Spot Forex trading both come with a high degree of risk. You must be prepared to sustain a total loss of any funds deposited with us, as well as any additional losses, charges, or other costs we incur in recovering any payment from you. Given the possibility of losing more than your entire investment, speculation in certain investments should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution’s financial well-being. Before deciding to trade the products offered by us, you should carefully consider your objectives, financial situation, needs and level of experience. You should also be aware of all the risks associated with trading on margin.
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