Dax Technical Analysis 02/02/2017

Good morning traders!

The dollar falls after yesterday’s Fed decision to hold interest rates. Perhaps the markets were expecting a more hawkish outcome, perhaps it had something to do with Spicer coming out and saying the when Mnuchin is in, they will address the currency value (suggesting they are going to try and talk it down). Sterling has hit a seven week high against the dollar and eyes turn to the economic calendar today, and for those interested in the Sterling; cautious trading may prevail with the heavy releases due out today.

Economic Calendar

00 Economic Calendar
00 Economic Calendar

Dax Technical Analysis

On the 5m chart we have a head and shoulders pattern with the end of the right shoulder breaking the neckline. If we draw an extension then it presents targets of 11575, assuming the move has not already happened and there is room left to go. Where to place stops and how to manage the trade is the main consideration. 11600 could be stubborn to break, but if that goes, it makes the move much more likely, just be aware of the daily S1 at around 11590. It’s possible that the level could drop further below 11575, so I intend to manage the targets and move them if necessary, I will keep an eye on volume picking up as well to indicate potential stopping volume.

05 Dax m5 Chart
05 Dax m5 Chart

Longer term, using the H1 chart scrolled out, we are still bullish above 11400 and the 11550-11575 zone is one that has seen plenty of volume traded at, in the past suggesting buyers could interested here. One thing to note; there is a much larger head and shoulders pattern emerging on this time frame, which dwarfs the 5m chart version substantially. Keep an eye on that. The gold rally is supporting the bearish view on indices for the moment.

I am going to try to stay away from the GBP pairs today, despite the potential moves.

03 H1 Dax Chart
03 H1 Dax Chart

Dax Support & Resistance

KEY LEVELS
Daily R211792
Daily R111726
Daily Pivot11655
Daily S111589
Daily S211518
200 Day EMA10757
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