Dax Technical Analysis 03/03/2017

Good morning traders!

Are we setting up for a Friday sell-off to continue from the US losses yesterday as Wall Street pulls back from its major highs, more than likely as a result of profit taking. Asian indices did trade lower overnight to follow in the US footsteps after the release of some disappointing numbers and sentiment seems to be one of “market top”. Is it time for a reversal and a trend change? Probably not, no. More likely just an overdue correction, if anything at all.

Greece is not going to run out of money until probably June, so the can will be kicked down the street a little longer. There is a delay in Greece receiving their third bailout because of the fact that they area already have debt at nearly 200% of GDP and reform and austerity is unlikely going to fix the problem. It was reported that Greece has requested an unknown amount of funds from the World Bank, annoying creditors. Keep an eye out for developments with this. Greece on its own will not sink Europe, but when Italy go the same way and then Germany and France hold a referendum to leave…?

Oil looks ready for a bounce, Gold is still trading at lows and USD pared gains but remains bullish at the moment with further Feb members fuelling the rate hike speculation. The algorithm remains bullish, but the market is pretty high already.


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Dax Daily Chart

Price action yesterday was confined to within 50 points as bulls and bears reached a stalemate. Ignore the economic calendar, I believe that the NFP is actually next week instead of today (correct me if I am wrong).

The technical trend is clearly still bullish, we are peeling away from the tops after reaching a two-year high and the trend defining level is under 11750 (or 11400 depending on how you look at it). We are above the 200 day EMA, above the Kumo cloud and waiting for an entry to go long. Reward to risk ratio up here is not great, so opportunities at the moment are not great.

01 Dax Daily Chart
01 Dax Daily Chart

Dax Hourly Chart

The 100% extension level that I discussed yesterday has rejected price and we are currently testing the 12,000 level for support. A break through this level will open up a pullback and the next levels I am watching are 11950, 11900 and 11860. There is a low volume zone between 11850-11960 where the price has previously not wanted to consolidate, so a short opportunity exists for traders looking to trade that.

Keep an eye out for the Markit PMI numbers.

03 H1 Dax Chart
03 H1 Dax Chart

Dax Intra-day Chart

We are comfortably inside the Bollinger band again now and approaching the 50 hour EMA, although currently below the daily S2. It was such a slow day yesterday that there is no a lot of interesting things to say about it. I am watching out for RSI divergence with a break of these bands. It’s possible that price action is beginning to set up a bullish divergence pattern. If price breaks to a lower low, but RSI doesn’t print a lower low, we have a buying opportunity.

05 Dax m5 Chart
05 Dax m5 Chart

Dax Support & Resistance

Daily R212108
Daily R112077
Daily Pivot12058
Daily S112026
Daily S212007
200 Day EMA10958