DNL may develop a Descending Triangle. Price currently at resistance

DNL has gone up from 5.98 to 6.49 within the 4-week span but looked tired after the spikes. Will it continue to move upward or retrace? Based on weekly chart, we see a bearish candlestick called Doji. This candlestick suggests that after few days of going up, the bulls and the bears are in equilibrium. Since it is not a strong bearish indicator we may need to see a confirmation via long red candlestick or a gap down. But so far there is also another reason why we have to be wary about DNL. The current candlestick is on the resistance level which is the 50% Fibonacci Retracement level and the Kumo or cloud.

If the bears will succeed this week then we might see DNL back to 5.96 If that will happen then we are seeing a Descending Triangle.

The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern. There are instances when descending triangles form as reversal patterns at the end of an uptrend, but they are typically continuation patterns. Regardless of where they form, descending triangles are bearish patterns that indicate distribution. -stockcharts.com


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