Good morning traders!
The DAX is trading in a 240 point range, and currently respecting the LVN as resistance and respecting the 085 as major support. Looking at the 7-day composite market profile, there is a double distribution pattern within the range, leaving behind a Low Volume node in the middle. Price will often like to cut through the low volume nodes when moving from one value area to another. That explains the gap this morning.
Looking at the 7-day composite market profile (chart at the bottom), there is a triple distribution pattern within the range, leaving behind a Low Volume node in the middle. Price will often like to cut through the low volume nodes when moving from one value area to another. That explains the gap this morning.
Dax Key Levels
VAL – 12190.5
VAH – 12272.5
GAP – 38 points
Bearish Dax Strategy
(Referring to the 500 tick chart)
We see buyer failure at previous highs (approximately 12320) which are directly under the blue Low Volume Node, again. This means the sellers remain in control. The sellers are targeting a break below 12085 to resume the overall, longer-term, technical downtrend.
Sell at resistance and target support
Resistance is currently in three major forms:
1 – Range highs
2 – The underside of the blue LVN
3 – Shallow falling trend line
Selling from these levels is most likely an effective entry, assuming that the sellers remain in control.
200 (taken out) – switch-back line from bearish trend support
180 – previous low
150 – previous POC from a lower HVN
085 – Major support
Bullish Dax Strategy
We saw a strong rally yesterday in the second half of the session which threatened to take out previous highs. The move began with bullish divergence, visible on the MT4 chart below and ended with a rejection just under the LVN marked out on the 500 tick chart.
With the sellers in control, it makes the bullish strategy a little more challenging, however if we keep it simple and buy just above support, then we can use the levels in the previous section ‘Dax Support’.
If we wanted to take profits just below resistance, then we could use these:
300 – attempting to test highs
335 – Start of LVN
435 – Just below horizontal resistance
500 Tick Chart