Dax Technical Analysis 17/03/2017

Happy St Patrick’s day traders!

The digestion of the ‘Dovish hike’ is still dominating the markets at the moment, and the EURUSD continues to surprise many as speculators are trading on the news that ECB may hike rates before ending the QE program, in a non-conventional way. Also the Bank of England caused a bit of news with their 8-1 vote to keep rates the same, the 1 voter to increase rates to 0.5% (Forbes, who leaves in June) suggests the others will likely follow suit fairly soon, even if they are not ready yet.

Dax Hourly Chart

We recently have been trapped in a range between 11915 – 12070 for much of March after having tested the range support multiple times. This range support formed just above the 50% retracement from the 24th February and 2nd March swing. Now, after the announcement of the Fed rate hike, we have broken through the previous March high, including the range resistance and have now settled on that range resistance.

If you look back to my article from yesterday, I said:

I would expect the price to settle closer to 12075 after a few days, assuming that it does not turn ultra bullish and continue to rally sharply. I say 12075 because the was previous resistance.

Well, we are here now, in fact, we settled almost exactly on that 12075 level last night, five points away. My normal instinct, based on the divergence between Dax and other indices, would be to believe that we are setting up a rally. But my concern at the moment is the EUR rally, one which often shares inverse correlation with the Dax.

So the levels to watch at the moment are a significant break below 12075, specifically below the 12000-12020 (confluence between previous high from end of February and 61.8 of the recent swing) retracement  zone which may signal a turn back towards the range bottom, or lower. Alternatively, if the previous resistance becomes support, we have a buying opportunity. Stop losses below that 12000 level could work as a longer trade and are interesting to me.

03 H1 Dax Chart
03 H1 Dax Chart

Dax Intraday Chart

We are in a retracement phase after a strong break through resistance.

If you have been reading for the last week or so, you will know that I have been working on creating a counter-trend/mean-reversion strategy, specifically looking at a new indicator to signal overbought or oversold opportunities that combine RSI divergence and Bollinger bands. It’s not quite ready yet, but it’s encouraging.

The very first signal from yesterday morning was a sharp rally, way outside the Bollinger band, causing bearish divergence above the daily R2 (pivot point indicator), a strong, compelling case for a ‘correction’ in the short-term, a good manual trade could have taken advantage of that (I didn’t), I have yet to set it all up to provide alerts to my Telegram (currently being built). I would think a good entry could have been the re-entry through the Bollinger band and a target could have been the dashed band (1 standard deviation = around 50 points profit) or the centre line (the trade would still be open). I need to test it.

My current algo rhythm is a trend following system, so is different to this new strategy, therefore it did not take this trade, instead waited for support, and then bought again, with varying success today. The algo is currently bullish.

05 Dax m5 Chart
05 Dax m5 Chart


DaxTrader Signals

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The Trading Exchange, [16.03.17 08:36] CLOSE DAYTRADE SELL #EURUSD @ 1.07181 | PROFIT: 9.45 PIPS | 2017.03.16 08:36 (GMT) | ID 61474921

The Trading Exchange, [16.03.17 08:38] DAYTRADE BUY #GER30 @ 12116.65 | SL:12067.95 | TP:12232.31 | 2017.03.16 08:39 (GMT) | ID 61492044

The Trading Exchange, [16.03.17 11:27] CLOSE DAYTRADE BUY #GER30 @ 12122.05 | PROFIT: 5.20 PIPS | 2017.03.16 11:27 (GMT) | ID 61492044

The Trading Exchange, [16.03.17 11:42] DAYTRADE BUY #GER30 @ 12116.40 | SL:12098.72 | TP:12159.24 | 2017.03.16 11:43 (GMT) | ID 61494617

The Trading Exchange, [16.03.17 12:13] CLOSE DAYTRADE BUY #GER30 @ 12098.55 | PROFIT: -17.06 PIPS | 2017.03.16 12:13 (GMT) | ID 61494617

The Trading Exchange, [16.03.17 12:25] DAYTRADE BUY #GER30 @ 12097.85 | SL:12058.59 | TP:12191.10 | 2017.03.16 12:25 (GMT) | ID 61495958

The Trading Exchange, [16.03.17 14:35] DAYTRADE SELL #EURUSD @ 1.07400 | SL:0.00000 | TP:0.00000 | 2017.03.16 14:35 (GMT) | ID 61498124

The Trading Exchange, [16.03.17 15:05] CLOSE DAYTRADE BUY #GER30 @ 12058.05 | PROFIT: -38.03 PIPS | 2017.03.16 15:05 (GMT) | ID 61495958

The Trading Exchange, [16.03.17 15:30] CLOSE DAYTRADE SELL #EURUSD @ 1.07297 | PROFIT: 8.34 PIPS | 2017.03.16 15:30 (GMT) | ID 61498124

The Trading Exchange, [16.03.17 16:36] DAYTRADE SELL #EURUSD @ 1.07382 | SL:0.00000 | TP:0.00000 | 2017.03.16 16:36 (GMT) | ID 61500553

The Trading Exchange, [16.03.17 17:35] CLOSE DAYTRADE SELL #EURUSD @ 1.07292 | PROFIT: 7.27 PIPS | 2017.03.16 17:36 (GMT) | ID 61500553

The Trading Exchange, [16.03.17 19:07] DAYTRADE SELL #EURUSD @ 1.07525 | SL:0.00000 | TP:0.00000 | 2017.03.16 19:07 (GMT) | ID 61502032

The Trading Exchange, [16.03.17 19:07] DAYTRADE BUY #GER30 @ 12072.40 | SL:12050.95 | TP:12123.34 | 2017.03.16 19:07 (GMT) | ID 61502036

The Trading Exchange, [16.03.17 19:17] CLOSE DAYTRADE SELL #EURUSD @ 1.07433 | PROFIT: 7.45 PIPS | 2017.03.16 19:17 (GMT) | ID 61502032

The Trading Exchange, [16.03.17 19:20] DAYTRADE SELL #EURUSD @ 1.07513 | SL:0.00000 | TP:0.00000 | 2017.03.16 19:20 (GMT) | ID 61502256

The Trading Exchange, [16.03.17 19:57] CLOSE DAYTRADE BUY #GER30 @ 12076.85 | PROFIT: 4.27 PIPS | 2017.03.16 19:57 (GMT) | ID 61502036

Dax Support & Resistance

Daily R212235
Daily R112157
Daily Pivot12101
Daily S112023
Daily S211967
200 Day EMA11058