One the 5 minute chart the is a descending trend channel which has been holding price and the hourly fractals clearly show the bearish trend characteristics of lower lows and lower highs. We have just come up to test the daily pivot from the underside and we are also at channel resistance, so I have taken a short expecting this mini trend to continue targeting a move towards the bottom of the channel, taking out recent short-term support at 10525. If the trade works out, then the support break could provide an opportunity to add another couple of units.
The 30 minute chart is showing some stubborn support around 10485, but if we pull a Fibonacci retracement from the Sept 30 low to the Oct 4 high, you’ll see that a correctivemove could go a little lower and still be considered normal in a bullish wave. So the previous trade I mentioned may look to target the 38.2% retracement of 10470. We are currently using the 34 hour EMA as support on this chart, it has been pierced once, but held and now it’s just consolidating and deciding the next move.
On the H1 chart, using historical horizontal levels of support and resistance, I think the next major level to the upside is 10695 and below is 10465. Traders may be using these levels to find buy zones and sell zones. Range traders will be looking to sell from between 10650-10700 or buy from 10465-10515. Breakout traders might be selling a break below 10465 looking for 10350 or buying a significant break above 10700 on the way to 10865. Price right now is in the middle of those two major levels, so buying and selling has almost reached parity leading to no movement as neither side can see value yet.
On the H4 chart, you might argue that we have seen the ‘lower high’ of this move yesterday around 10650, so if that’s the case we can expect to see further downside of the next few days, but that is assuming that this bullish wave has finished and considering what’s happened with the FTSE recently, we need to be careful to jump to that conclusion too early.
The daily chart has an interesting candle formation and I am sure there are more qualified ‘chartists’ who could conclude something more profound that I can, but isn’t that a back-to-back engulfing pattern there? 28 – 29 – 30 September candles. The 30th candle pierced below both previous candles showing plenty of room to the left of the chart, bounced off the daily 200 EMA and yesterday’s candle once again closed higher. If you were a naked trader, you might be alerted to that as a bullish signal.
Dax Support & Resistance
|200 Day EMA||10241|