Good morning traders!
A quick start to the week with a bounce/gap higher after a really bearish couple of weeks. Some traders believe that this is simply just a pullback or relief rally to ease some of the oversold pressure, some traders believe this is the start of a reversal. If I had to take one side, I would probably go with the relief rally camp.
Targets for a relief rally would be somewhere between 9200-9400. The short term bearish trend has now been broken after 9130 was taken out, but we have already passed the daily R2 so I wonder how much higher we see today. The gap that opened this morning can provide an opportunity to trade, but the 9130 level provided support on the first attempt. If we break that, we can see a move lower ad price looks to move back towards the daily pivot.
US investors are celebrating President’s day today, so there won’t be the usual US session to influence the afternoon’s trading, therefore it’s possible that we have already seen the move for today.
I actually shorted about 20 minutes ago after seeing the gravestone doji on the 5 minute chart at the daily high, but it’s always tough to short a bullish move, so I may have to abort that if it goes the wrong way. I am looking for it to break the 9130 and close some of the gap for a nice trade. Open: 9184 TP: 9049 SL: 9242. If it loses, no problem, I won’t be risking more than 1% of the account and the reward is more than 2x the risk.
There is a really short squeeze happening at the moment, this is a strong rally and the short term trend has been broken so perhaps wait for higher levels to short. But we are approaching the January 20 low, which could be interesting to watch as a resistance level. There may be a few days of sideways range trading before the next move down too.
The move has happened already today, so I probably wouldn’t personally go long just yet, I would wait for either a gap close before choosing a long or a period of sideways price action and base building before taking a long. I think there is resistance above around 9300, so those levels could be interesting targets.
Dax Support & Resistance
|200 Day EMA||10389|