Dax Technical Analysis 07/02/2017

Good Morning Traders!

Siemens had a good AGM last week with almost every division of the business delivering great numbers, but Mr Kaeser (is that cheese in German? – probably not) failed to mention about Healthineers, the company’s medical technology division, currently the most profitable division. This is likely to branch off and be floated on the stock market later this year. The new company could even be big enough to be listed alongside Siemens in the Dax and it will probably be one of the most significant floatations of 2017, keep an eye out for that one.

Political uncertainties in Europe and the US have the Dax under control as it declined yesterday by 150 points as gold continued to rally. There was a clean break lower from the ‘bear flag’ mentioned yesterday in the article and now we have traded straight into support. We have traded as low as 11430 this year and price tried to test that level again in early trading today.

On the daily chart, we are testing the top of the bullish trend channel which we broke above in December and price closed at the lowest level of 2017 so far. The 17th January intra-day low of 11427 would be an interesting level to watch as a decent break below this may signal a deeper correction, but if this level holds then it will interest buyers.

01 Dax Daily Chart
01 Dax Daily Chart

Line [2] was broken early in the trading session yesterday and as expected, line [4] provided some support, price bounced back to kiss the [2] goodbye on its way lower and [4] eventually gave way to near 200 point decline. The move continued this morning. If we put a fib extension on this move, it suggests 11362 would be the 100% level. Bears may be looking for a sell at 10600 (the underside of [4]) to target a move down to this extension level. If this were to happen then I suspect we would see all kinds of selling activity as it would look incredibly bearish, but instead of declining lower I could actually see price reversing and continuing to move higher. Let’s see how it plays out.

03 H1 Dax Chart
03 H1 Dax Chart

Dax Support & Resistance

KEY LEVELS
Daily R211760
Daily R111635
Daily Pivot11557
Daily S111433
Daily S211355
200 Day EMA10782
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