06 m5 Dax Chart

Dax Technical Analysis 10/02/2016

[wp_ad_camp_1] Good morning traders!

When I get a chance to have some time away from working I like to get the surfboard out, drive down to the beach (somewhere in Devon or Cornwall), put the wetsuit on because it’s freezing and try and catch some waves. I say this because yesterday’s intra-day charts reminded me of clean sets of waves.

Have a look at the 5 minute chart, it was actually fun, almost easy to trade and I like days like that, days like that make me grateful that I can work while at the shop, or engineering a recording in the studio, or pulled over on the side of the road. God bless the laptop and mobile phone combo.

Anyway, I digress.

I kept to the basics yesterday using the Stochastic indicator (15,5,5) on a 5 minute chart and got some great selling signals. There were some buy signals too, normally my favourite, but the market is bearish and of course I don’t like to trade against the trend.

In summary, we have given back over 2,600 points since the highs of December, we have closed at yet another daily low and we are heading down towards an eventual test of 8,300 from Sept/Oct ’14. 8,900 is likely to provide the first layer of support and price failed to close below that. The trend is bearish below 9,350 in the short term and 9,930 longer term. Pull back targets from current levels could be between 9,100-9,300. Alternatively  break below yesterday’s low and close at another low could still open further declines towards 8,300. We are oversold and have already reached the weekly S2 and it’s only Tuesday. We are at the bottom of trend channel support on the 4-hour chart and the Daily threatened to post a reversal candle, it looks less dangerous now.

[wp_ad_camp_1] Bullish View

Bulls will be looking to speculate a bounce from current levels, first attempts will be placing a stop under the low from yesterday and target the pull back zone. A failure here could open a divergence trade. This view is supported on the 4-hour chart if they trend channel holds and also on the 30 minute chart where we have already reached the 22. It’s not often we trade much lower than the S2. There is horizontal support around 8,900 but I am unsure of its strength. Gold seems to be topping out with a potential pull back here as well, which could signal strength in equities, considering the negative correlation. But if I am honest, I am sure most Bulls, myself included, would concede that this doesn’t yet look like a reversal signal, pull back maybe, but reversal, no.

I’d be watching the four hour chart and 30 minute chart for potential reversal patterns in the short term to signal the pullback.

Bearish View

Well it’s clear that at the moment, there is a magnet attached to 8,300, we seem to be drawn to it. Or to use a terrible sporting analogy, the market has taken a right hook to the temple and its legs have gone, it is just hanging on for the bell right now. So when a market is trending and momentum is strong, like right now, jump on board and ride it until it kicks you off. But trends like this can make your whole month or quarter, so go book your holiday, test drive the new Audi, pay your credit card bills, make an early mortgage repayment, treat your family and friends, go play golf while you sell the crap out of it. Ok, enough of that, although seriously, perhaps wait for slightly better entries than the yearly low, because it’s well cooked right now.

I’d be using simple oscillators to signal selling opportunities, aiming for 2:1 or 3:1 on the money and then keep it ABC. Watch for divergence on the failed attempts and re-enter until a reversal signal comes along or short term trend defining level is taken out.
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Dax Support & Resistance

KEY LEVELS
Daily R29176
Daily R19041
Daily Pivot8907
Daily S18772
Daily S28638
200 Day EMA10410

Dax Charts

02 Daily Dax Chart
02 Daily Dax Chart
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03 H4 Dax Chart
03 H4 Dax Chart
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05 m30 Dax Chart
05 m30 Dax Chart
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06 m5 Dax Chart
06 m5 Dax Chart
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