Dax Technical Analysis 10-08-2017

Dax Outlook

The market is currently bearish technically on the longer time frames, the trend defining level is xxxx
We are also bearish technically on the short time frames as well with the trend defining level being xxx.

There is currently a lot of geo political tension which is supporting the case for a bearish position. However, price action is already at support and not providing a seller with good reward to risk.

(Updated: As I was typing this article, price action broke through the major support. So we are below the opening range, below the value area from yesterday, below the major support and continuing the bearish trend. Many traders will use this as an opportunity to get short. However, although I agree that sellers are in control, I believe we are close to one of their objectives already. So I am waiting for a different spot to go short.)

Bearish Strategy

Sell at resistance, take profit near support.

Opening two-hour range has been pierced suggesting a break lower. However directly below this two-hour range is the support zone from the recent swing lows. This support zone is between 12085-12100.

A break below 12085 could be the start of the resumption to the downside, assuming that it is not a trap. A strategy to trade this would be a defence of previous support, a test. So watch price break lower, with strength, then pull back to test the underside of the 085-105 zone. If that test holds and buyers fail, there is an entry.

Targets:
935-955, PREVIOUS LOW
025-040, measured move (Fibonacci extension) – very close to this already

Bullish Strategy

Buy at support, take profit near resistance.

Buyers will have to believe that the current break through major support is either a trap or an opportunity to watch for seller failure. Buyers will have to concede that the break is not great for them and any buying activity is completely counter-trend and lower probability.

Seller targets will be good spots to consider a buy.

Another option is a vwap retracement. We are currently extended after breaking through 085, we have been below the deviation low and are currently 50 points below vwap and threatening to go lower. The second half of the session could open up the opportunity of a pullback towards vwap (which will probably then act as a shorting opportunity – especially if vwap and previous support have a confluence of levels).

I do like the vwap retracement and will be considering this for myself.

Targets:
The underside of previous support 12085-12100

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