15-01-2018 Dax Charts
Dax Daily Chart
Let’s jump into the charts and take a look at the Dax daily. I have marked out the P0-P5 pivots here and draw a centre line through pivots P1 and P4, as per Alan Andrew’s original course. This centre line forms the basis of an ACR line set (Action, Centre, Reaction). The ACR line set is normally used to anticipate where P5 will form. However, in this case, we can use the line set to anticipate an opposite and equal reaction on the other side of the centre line (green shaded zone – a few candles back from the doji).
This chart remains bullish above the green shaded zone and we are watching for a potential foothold forming at current levels. If this support zone holds, then we have an opportunity to go long. That’s a big if.
Dax 60 minute – Bullish
I may have said this already before, but I am not normally an advocate of using Fibonacci retracements on the Dax. However in this example, I have drawn one from the recent bullish impulse leg (from the very low to the very high). You will see that price is currently trading on or around the 38.2% line. You will also notice that the most recent lows (there are three) are starting to form short-term support. Prior to this support formation, we could see the bullish divergence from the oscillator and this provides a bullish signal.
A trade in the direction of the trend should provide a minimum of 3:1 reward. A stop loss should be placed behind some structure and in this example, it would be the minor swing low. The target would be at least 3 times that amount. The higher the better. Never risk more than 1% of the account of a trade.
Dax 60 minute – Bearish?
I was unsure of what to label this one as, so I have used ‘Bearish’. The thinking behind this chart is as follows. We recently had a large bullish impulse leg, completing at EP5 (expanding pivot 5 – an idea from previous work and previous articles). Since then, we have reacted to EP5 by retracing lower. This is normal and does not necessarily suggest a reversal.
However, perhaps the retracement is not yet over. When price reacts to an EP5 (normally the end of an expanding pivot setup), you tend to see a large retracement back towards EP4, perhaps 50%. We have not reached that level yet. So I have mapped out the minor swings within this current retracement leg. 0-4. If we use Alan Andrew’s work again, to draw an ACR line set through pivot 1 and 4, you can see a projection for P5 somewhere in that shaded zone.
This is an obvious target for sellers and also an area where buyers will possibly be interested to pick up some cheap contracts.
15-01-2018 Dax Levels
|Value Area High *||13248|
|Value Area Low *||13213|
|14 Day ATR||131.82|
|*These are FXCM numbers, not futures numbers. Please be aware that FXCM can often be 5-10 points higher than futures prices|