Good morning traders!
The last trading day of January saw a few European indices slip away, perhaps because of immigration policy, perhaps because of the end of month profit taking, perhaps because of the latest Deutsche Bank scandal (how long can they survive these), perhaps because of the monetary policy expectations after the release of stronger inflation figures, perhaps a combination of all. The Dax closed 130 points down after surprising many bullish traders who jumped in expecting a bounce.
The first chart (below) is an hourly chart with a market profile indicator and tick volume which covers the 2017 period. After the sell-off from the highs we had a mini bounce on the first previous resistance zone (650-680) and then broke through to find support at the second zone (525-555). We are currently back inside the popular January range, so it seems likely we can find support here.
A long from 575 with stop below the low from yesterday (or the previous range support) could be interesting, target would be the range high and extended targets would be a break towards new highs.
This next chart is the hourly and this is providing a buying signal, based on bullish divergence with price a making lower low and the oscillator making a higher low, this is coupled with an increase in volume so if this is the bottom of the move, we have a spot to go long.
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The final chart is the 5m chart, which includes the tick volume indiciator, RSI and a fibonacci retracement. It shows a volume lift around 8am (London, open) but also as RSI begins to cross back from overbought and price tags the 61.8% retracement. It could all just be coincidence, but after a heavy sell off, it’s a bearish signal short term. This either contradicts the previous signal above, or suggests that current price is not currently the best value for bulls and wait for a better entry.
Bears would be looking to sell with stop above 665 targeting a test of the range low, perhaps a break lower to complete an extension of the move.
Dax Support & Resistance
|200 Day EMA||10748|