01-02-2018 Dax Technical Analysis

Good morning traders. There was a more substantial gap higher this morning of around 50 points (according to FXCM) and as a result, we have now broken above the press line (trend line) that has been forming since the 24th January. You can see the selling pressure acting as a weight on price and the line contained price very well, until now. As the press line has now broken we are looking to see whether this becomes a Median Line or whether it is another fake break.

So one idea could be that the press line becomes a centre line and we see an opposite and equal reaction on the other side of the centre line. It assumes that this morning’s gap higher are a sign of this move expanding out of the recent bearish trend. The question is whether this expansion returns to prior trend (fake break) or whether it reverses (kisses the previous line goodbye).

01-02-2018 Daily Chart

The major fork on the daily chart (pivots: 29/8 – 7/11 – 2/1) shows that price action is testing the lower median line parallel. This may well be a sign for buyers to get in on a dip, but just be cautious as the move to reach the median line failed. There is a potential 7:1+ move out there though.

01-02-2018 Dax Hourly Chart

Using a Roger Babsonesque Median Line, (pivots: 17/1 – 23/1 – 31/1), I am wondering whether the target line (the median line) gets a visit – assuming that the major swings visible on the daily chart continue to the upside. If we see a move to the upside then again, this offers good reward to risk.

Don’t trade it blindly without a solid trading plan.

01-02-2018 Dax Bearish Idea

I appreciate that these charts are primarily bullish and we are in a bearish trend (in the short-term), so what exists to short short? Well, we are bearish below 13390 and it’s possible that the 13300-13320 recent high could be the next lower high, assuming that we break to a new low. So a pullback closer to that level could offer an entry to short.

 

01-02-2018 Dax Trade Updates

There is a large word of warning here and that is because this type of trade is counter-trend and it has a higher probability of failure. Such as the trade we took yesterday. Yesterday’s idea was based on a test of the previous bullish ignition and assuming that the recent piercing of the press line was a signal for higher price action (temporarily). I entered a 4:1 trade (which means we’d only need to be correct 20% of the time to breakeven – any more is profit) which got stopped. The move we saw turned out to be a fake break.

01-02-2018 Dax Key Levels

KEY LEVELS
POC *13214
Value Area High *13230
Value Area Low *13183
14 Day ATR142.27
200 EMA12682
50 EMA13185
Daily R213320
Daily R113260
Daily Pivot13210
Daily S113150
Daily S213100
*These are FXCM numbers, not futures numbers. Please be aware that FXCM can often be 5-10 points higher than futures prices

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