Dax Technical Analysis 15/07/2015

Good morning traders!

Please excuse my absence from the reporting arena. A quieter day yesterday than we have been used to with headlines surrounding Greece seemingly less dominant and taking a back seat to interest rate expectations, specifically here in the UK. A much busier day is forecasted for today with multiple items of note on the economic calendar.

But leaving the forex market to the side, let’s jump straight into the Dax analysis.

Dax Support & Resistance

Daily R211628
Daily R111580
Daily Pivot11497
Daily S111449
Daily S211336
200 Day SMA10911

Dax Charts

This long-term fork still shows an interesting loyalty to the overall underlying trend and despite the large (much needed) sell-off in recent weeks we are still in the top half of the channel, after having bounced from the confluence zone of the daily 200 EMA and fork median line.

I suspect that in the short/medium term, especially over the remaining summer months, we can expect to see further downside and consolidation as liquidity dries up, traders take time off with their families and friends (those they have left) and the market gets a little boring, but overall in the longer term we can still follow this underlying trend to the upside. So as a swing trader, I am looking for opportunities to buy.

2Dax Daily Chart
2Dax Daily Chart

I find the technical breakout on the four chart interesting as it signals the beginning of a reversal, I would like to see a break and hold above the 11,640 resistance. A bullish short term trader may decide to get in from lower levels because the current wave up has been steep and will likely see a pullback. A simple fib retracement tool could suggest a pullback zone, perhaps targeting the 50% level (11130-ish). A more aggressive bullish short term trader may trade the bounce from the topside of the recent bearish channel with a stop under the 61.8% fib retracement looking to target a break above the resistance.

A bearish short term trader could be looking to short from current levels with a stop above the June highs looking to see a pullback.

3Dax 4-hour Chart
3Dax 4-hour Chart

On the 30-minute chart I still like the 34 hourly EMA (34 periods was chosen as it is a number from the fibonacci sequence, which features heavily in many trading algorithms. I use the hourly EMA on a 30 minute chart because it’s slightly finer granularity.) We are above the moving average so a technical trader who uses this tool may want to only look for long trades, until we break below it.

For the week we trade underneath the weekly R1 pivot level, so there is certainly plenty of room to the upside, but the June resistance may prove stubborn at first test.

4Dax 30-minute Chart
4Dax 30-minute Chart

The FXI indicator is still proving useful and suggests resistance above. I am delighted to have seen so many of you using this tool. Thank you all for your comments and screenshots, congratulations for those who have had success.

The RSI indicator at the bottom right, which also includes an 8 period EMA for easy trend spotting, shows us approaching overbought levels

6Dax FXI & RSI Charts
6Dax FXI & RSI Charts