you're probably right but do you have the stomach to endure a 500 points loss in the dax and calmly wait for the eventual come back?
this goes back to curve fitting problem. the fact that our current trend line projection points towards that particular level doesn't have statistical significance once it has proven its success for a extended period of time. as you know, that never happens, as these lines are constantly being adapted to fit the latest price developments. i would call these lines, pseudo-comfort lines, merely because they create a false sense of security and back the trader's decisions to enter or exit the market accordingly.
the longer term trend lines are very risky, often creating a prolonged and relaxed sense of accurateness, that inevitably end violently and at the expense of a major blow in the trader's long term expectancy. that's not because they are good or have a fundamental statistical edge, but rather, because they cover 1 or 2 SD's of price changes in wider time frames. it is like saying that during the next month, the dax wont move more than 500 points either way. that's a hi prob call, yet it doesn't tell us anything about the direction or real magnitude of price change.
not trying to crash the party here, in fact, i also use and advocate the use of trend lines, but, have no doubt they dont offer more than a biased advise to enter or exit the market.
re your dax projection, i would also be on a long-only mode until the dax keeps this pace, but i would be cautious to reverse my bias to short side if the dax would break the 6700 barrier. i would have to see fundamental data to back up the new descending trend whether the dax was at 6700 or any other level, for that matter. other than that and i am in long-only mode. i agree with you concerning the risks of entering shorts in this market. it is probably the most risky business in trading - calling the top business. i wouldn't dare to pick a top or bottom. just manage my trading inventory on a daily basis.
