Dax Technical Analysis 10/02/2015

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Good morning traders!

Yesterday we saw a continuation of Friday’s sell-off in what now appears to be the start of the much-needed correction from the all time high. I am in a strange position at the moment, I have been (and still am) bullish on the Dax, but based on the need for a healthy correction here I am happy to park the bullish sentiment and capitalize on the temporary bearish moves. I would personally welcome 10200, but I suspect there will be plenty of support to break to get there. Today I would like to see much of the same again. I am currently holding two small short positions on this account.

Bullish play today: play the bounce off either 10600 or S1 and target the daily pivot

Bearish play today: short from current levels or find a better entry from 10675

 

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Support & Resistance

KEY LEVELS
Daily R210854
Daily R110753
34 Hour EMA10735
Value High10679
Daily Pivot10678
24hr VWAP10670
Naked VPOC10663
Value Low10630
Daily S110577
Daily S210502
200 Day EMA9684

Dax Daily Chart Analysis

RSI has dropped below 60 for the first time since mid-January, currently around 57. back in mid January, price was just about to break 10k. The bearish divergence we saw from the article yesterday certainly seems to be a valid reason for the correction behaviour at the moment.

Dax Daily Chart
Dax Daily Chart

 

Dax Intra-day Chart Analysis

We took out S2 fairly early yesterday which was the main highlight and gradually tumbled lower in stages after. 10615 was a key level of support and it was tested twice before being pierced at the third attempt late last night. The EMA is pointing a little a little further down and price plummeted to hit the lower Bollinger band and has now bounced back towards the mean, leaving a gap below for a further fall. 10600 will likely be stubborn.

Dax Intra-day Chart (30 minute)
Dax Intra-day Chart (30 minute)

 

Dax Volume Profile Analysis

Yesterday produced a bottom heavy distribution, with a pullback towards VWAP at the end of the day. You could draw a trend line sloping downwards across the peaks of the day and this could perhaps be resistance. If we open higher today, then I would like to see either the value area high (YVAH) or the VWAP for yesterday (thicker black line) act as a level to bounce lower from.

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Looking at around the low 107xx level, there is a worrying low volume pocket, meaning if we take out 10700, we can easily move towards the mid 107xx, this will stop my trade out, so I am hoping there is plenty of resistance.

Dax Volume Profile Chart (5 minute)
Dax Volume Profile Chart (5 minute)
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