Dax Technical Analysis 01/03/2017

Good morning traders!

March is here and we are into the last month of Q1 2017 already. I hope you all had a prosperous and profitable February.

Yesterday all eyes were on US President’s speech to congress and in summary he is going to ask for $1 trillion bucks for intrastructure investment, he will repeal and replace obama care, they’ll work on historic tax reform, and build a wall. Nothing new. The dollar initially saw some pressure before continuing it’s upward trend, most likely on the back of statement from the Fed’s Williams who said the March hike decision is “receiving serious consideration”.

Today there are a few high impact news releases, Bank of Canada interest rate decision and rate statement is due out in a few hours, so watch your CAD pairs, also we have the ISM manufacturing PMI as well. In other news, apparently Trump is postponing his visit to the UK (it’s fake news, by a horrible news agency who are the enemy of the state, apart from the page 3 girl, I’ve already grabbed her by the pu… – my terrible Donald Trump impression). Also the French elections seem to still be dominating the European headlines. Finally the Dax, we seem to have finally pushed away from the thorough test of support around 117xx zone, so the next question is where are we heading now?


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Dax Daily Chart

We are already +160 points up on the day (not the signals service, just the daily candle) at the time of writing as the Dax challenges the 12,000 level once more. We are already stretched after the move this morning, but it’s not unusual for this market to defy gravity and continuing moving higher into overbought territory. Just look at what happened at the beginning of December.

12,000 may be taken out today, but 12050-12075 will likely provide some initial resistance, like it did a week or so ago. If the momentum continues, then bears may only find opportunities to take short term trades on smaller pullbacks. My algo is still bullish, but all trades have been closed out for a profit.

01 Dax Daily Chart
01 Dax Daily Chart

Dax Hourly Chart

We are at a familiar price at the moment, with 12,000 right above us after having sliced through 11875 as though it was not even there. I still think that could be an area to add to longs. We had the bullish divergence signal on the hourly chart from a few days ago and this has played out very well. Profit taking at this stage is not a terrible idea because we are overbought on the oscillator and approaching a couple of resistance zones.

A week or so ago I discussed the Fibonacci extension, 12070, from a previous move and I suspect this could provide a sticking point, especially if we get there today.

03 H1 Dax Chart
03 H1 Dax Chart

Dax Intra-day Chart

I have built an indictor that will show me signals of this particular type: RSI divergence outside of a (50, 2) Bollinger band, based on 1 hour data. Well, the indicator has alerted me to the Dax. So although I am unlikely going to sell the market, it has slowed down my ambitions to buy. On top of that, we are already above the daily R3 (pivot point indicator), so yes I want to buy, but not at this price.

05 Dax m5 Chart
05 Dax m5 Chart

Dax Support & Resistance

Daily R211894
Daily R111861
Daily Pivot11820
Daily S111787
Daily S211747
200 Day EMA10936