Dax Technical Analysis 13/07/2017

Morning guys, no video today because I was unable to record the webinar this morning, which was hostJohny John FTSEman. So I will be back tomorrow with one instead. Thank you John

As for today, I have had to park the bearish bias simply because of the strong momentum behind this move. We are in a period of price discovery and when the Dax trends it can trend for a few days. So as I am a bit late to the party, I won’t buy just yet. I will watch and wait. We seem to be looking to test the underside of previous support.

Dax Daily Chart

  • 12300-12400 now looks like much strong support
  • The strong candle yesterday and reluctance to trade between 12500-12600 (low volume pocket) suggests further bullish momentum
  • Underside of the rising triangle support is an interesting target after breaking through the grey line
01 Daily Chart - Dax Technical Analysis
01 Daily Chart – Dax Technical Analysis

Dax 2-Hourly Chart

  • The lower, small, thick black parallel was broken and if that break represents a neckline break from an inverse head & shoulders then the extension targets could be between 12750-800
  • The lower dashed line (channel support) is an area that I am looking for a reaction but 775-800 is the most interesting area for me
02 2 Hourly Chart - Dax Technical Analysis
02 2 Hourly Chart – Dax Technical Analysis

Dax 5-minute Chart

  • We are above the upper Bollinger band and posting bearish divergence, another reason to add to my shorting setup yesterday. But as the first one failed, I will wait.
  • Often, the Dax will spike, then have a small consolidation, then spike again, going completely against the normal market behaviour. So I am not writing that idea off either.
  • I will keep an eye on a re-entry here
03 5m Chart - Dax Technical Analysis
03 5m Chart – Dax Technical Analysis

We went short yesterday in the second half of the session, expecting a pullback towards VWAP. This was the information that I posted the Journal

DAYTRADE SELL #GER30 @ 12635.65 | SL:12660.00 | TP:12570.00 | 2017.07.12 16:24 (BST) | ID 13755996

(These are FXCM prices, not futures prices)

Context – Above the deviation high, bearish divergence and we are seeing a delta divergence as well. We have reached extension targets from the swing today and are currently stretched. My thinking is a 0.5% risk to retrace back to vwap in the final part of the session. I will happily break it into three parts and remove partials as it plays out.

I think the risk is that this is a bullish breakout and we are not at the top yet. Worst case scenario, we see another spike and the move goes against us. In situations like this, I find a reversion to VWAP a fairly high probability move, picking a stop loss wide enough to allow room to breathe is the challenge.

We have given ourselves a 3:1 and the target would represent a realistic pull back towards VWAP.

The new Journal is nearly ready. I am looking forward to unveiling it.