Volume Profile Analysis

Dax Technical Analysis 03/06/2015

Good morning traders!

Well I might need to be taking a bit of a back seat from trading over the next few days, because we are still hovering around the danger area and I stand to take a fairly substantial kick in the nether regions. It’s moments like this, when you are about to take a near 9% hit to the account that you think…. why am I bullish? Why didn’t I hedge? Why don’t I just short now? Shall we just close it all out and start again?

But then I think, get a grip, give myself a mental slap and remember to accept that trading has ups and downs. But I will not be stubborn. I will turn bearish where necessary, but has there been a global change in risk trends and have the fundamentals pointed towards more longer term slow down? Not that I can see just yet.

Getting back to my own trades, I have cut some of my position, but I am holding out for a defense of 11150. Had I not have cut, then the losses then I would already be in double digit %loss territory.

The bigger picture still shows us bouncing around inside a large range, moving sideways. The range can be seen on the daily chart from end of April to now and one outcome could be that we continue this pattern of consolidation and slowly but surely coil up and eventually break out. The bearish outcome is to break below 11100 and continue to head down to 10700 which would complete a 100% extension from the 13/4 – 7/5 swing down.

Correlation between EURUSD and Dax has been fairly strong (inversely strong), so when the Euro weakens, the Dax strengthened. The reverse is currently true and I just wonder what reaction we get in the EURUSD, as I still see room to move down and this kind of rally can sometimes precede a further leg down. So I will be watching the reaction to 1.12. Greece is clearly still on the agenda, but there is nothing special to note that we don’t already know.

I realised I stopped updating my trade page last month which showed the results from trading my signals, the simple truth is, I stopped trading the signals because it was taking me so much time to manage the site and retrieve the data that I didn’t see the benefit. Researching a coder for my automated trader has taken up a lot of my time. Eventually I hope to have my automated trading software trade my signals automatically and then post it all up to twitter automatically. But it’s a work in progress and may take a little bit of time. Contact me if you are interested in learning more. The system will be based around my RSI indicator with Alert.

So the most interesting image I have been looking at from my charts is this one which shows a harrowing low volume pocket, just waiting to be pierced below us. This is a 150 day composite volume profile histogram with vwap and 2 deviation bands (daily chart). The low volume pocket is below support at 11150.

Volume Profile Analysis
Volume Profile Analysis