We have liftoff! Dax is rallying hard and has just taken out 10300 (at the time of writing). The signs were bullish this morning when we gapped higher and burst through the range of yesterday with pretty strong momentum. My subscribers received a number of signals yesterday, one in particular did very well today, which was a buy @ 10121.25 | SL:10041.75 | TP:10280.25 and although it would have hit target, I got out around 10260 for a healthy profit, which more than made up for some of the smaller losers. The joys of a good risk:reward ratio.
If we look at price action, intra-day, we are now on the third bullish wave of the morning, we have taken out the daily R4 (we almost never reach this) and I wonder if we may run out of steam and have seen the top for today. I would suggest massive caution and small stop losses for anyone looking to short this market today, because it’s already punished plenty of bears today. A potential example of a trade would be shorting 10295, stop above 10320 and targeting a pullback to the previous ‘consolidation’ range 10265. Not the best risk:reward, but it’s an idea. But all too often the Dax will likely just continue in the direction that the breaks happen and catch the counter-trend traders off balance. So I am reluctant to try that myself.
Here are a couple of realistic targets if we continue to move higher:
10374 – end of May high
10486 – mid April high
Yesterday there was nothing exciting to discuss, we were trapped in a narrow range, digesting the Friday reaction and accumulating. The RSI system, with a default 70 30 14 setup, on a 5 minute chart would have yielded two signals. If your profit target was something like 4 x ATR (average true range – one of the functions on the expert advisor system, really easy to use), you would have hit both targets and gain around 80-90 points, not bad!
If this bullish breakout is the start of the next trend, and you believe that the best strategy right now is a dip-buying strategy, then use the RSI system and try setting the levels to 80 40 and 14, one a 5 minute chart and see how many signals you get.
Dax Support & Resistance
No point in putting these in today, they mean nothing as we have already smashed through the daily R4!