16-01-2018 Dax Technical Analysis

Hello traders. The ECB rate hike speculation is increasing, and so are the number of column inches devoted to QE coming to an end. These fundamental factors are playing their part in the current disparity between the DAX and the US indices. There is also a lot of Brexit talk, specifically around how damaging it is likely to be to European (and German) business.

I believe that the biggest headache will be a ‘no-deal’ situation because I believe that this will affect financial services the hardest.

16-01-2018 Dax Quick Outlook

We are in a consolidation period and ranging between 13145-13300. We attempted to take on 13300 this morning and failed.

There is no major news today. There is the European CPI (Consumer Price Index – inflation indicator) tomorrow which will perhaps add additional fuel the rate hike speculation. A high reading is seen as positive or bullish for the EUR, while a low reading is seen as negative. Also on Thursday, Weidmann is speaking.

16-01-2018 Dax Technical Analysis

10 Minute Chart

I picked this chart because I like the centre line on this ACR line set (the middle of the three parallel lines). Price has been pressing this centre line for a few days, and today we saw Bullish action. The action line (the higher of the three parallel lines) has called the top of previous moves as well as the most recent one, this morning. If price breaks below the centre line, then I have marked out a potential target zone at the reaction line (the lower of the three lines).

There are two ideas here:

1 – A break above the action line and above 13300

2 – A break below the centre line, seeing a move down to the reaction line and then a bullish reaction to take us higher

Bollinger Band and RSI

I get asked all the time “what’s a really good way to trade the DAX for a beginner?”

The simple answer is: “there is no single way.”

But I remember filming a video a couple of years ago showing a simple strategy using Bollinger Bands and RSI. Have a look at it here: https://www.youtube.com/watch?v=BR2Ps1e84-E

Weekly Chart

The weekly chart can often help keep things in perspective.

We have a lot of bears around at the moment, especially around 13300. I suspect that they are targetting a revisit of our most recent pivot component (shaded box). I doubt that we are heading for a major reversal and disagree with those who believe it in the short-term, but I certainly would welcome a chance to buy from lower prices.

250-Trade Chart

This chart shows how effective the Action Centre Reaction (ACR) line set can be.

I pulled a centre line through points a and b. The next step was to pull a parallel back to point c (action line). The final step is an equal and opposite parallel on the other side of the centre line (the reaction line).

Notice how the centre line cuts straight through the gap and holds price after the yo-yo price action? Also, notice how the price reacted aggressively at the reaction line? These are observations that occur very often using this line set. It is just one of the techniques we use every day in the Premium Channels. If you subscribe as a premium member, you will learn a lot about these line sets. Find out more here.

16-01-2018 Dax Levels

POC *13200
Value Area High *13219
Value Area Low *13193
14 Day ATR134.75
200 EMA12606
Daily R213309
Daily R113252
Daily Pivot13211
Daily S113154
Daily S213112
*These are FXCM numbers, not futures numbers. Please be aware that FXCM can often be 5-10 points higher than futures prices