Good morning traders!
Blink, and you can miss the moves. First thing this morning the Dax hinted it wanted to move lower and after a bit of hesitation, it hit the deck around 8am GMT and we are already at the daily S2 (around 9:30GMT right now). I have just posted a signal up on twitter which was interesting, but it’s a counter-trend signal.
I entered @ 8713 with TP: 8800 and SL: 8675. The signal was based on RSI positive divergence, at daily S2 and 8700 rounded number after aggressive sell. It’s a pullback trade. Not my favourite, but worth a try. It’s treading water as we speak.
Selling the Dax this month has been incredibly profitable, just be warned that the trend is already pretty stretched now, so jumping on now could leave you exposed to a larger pullback.
If you look at the daily chart, and draw a Fibonacci extension tool from the December 29 high, to the January 19 low, retracing back to the January 27 high, you will see a 100% extension target of 8301. If you scroll back to October 2014 you will notice a similar price as a key level of support. Price may not go straight there as there may be a number of bounces before it happens but in the medium term that would be my personal target.
On the four hour chart we are still inside the regression channel and have given ourselves some headroom by bouncing from the lower Bollinger band. Stochastic indicator has crossed to the upside and made a higher high, but this was more than likely as a result of yesterday’s attempt to bounce.
On the 30 minute chart we are bearish short-term below 9130 which was the lower high from yesterday so the bearish trend is still strongly in tact as this morning we created a lower low. Swing traders will likely have moved their stop losses to just above that 9150 level. The only concern for bearish traders right now is that we are already below the weekly S2 with various oscillators confirming we are over sold, they might feel it needs a bit of relief allowing price to bounce.
To trigger another sell, I would like to see a move towards the daily pivot, perhaps 8900 first.
Dax Support & Resistance
|200 Day EMA||10415|