Dax Technical Analysis 17/06/2015

Good morning traders!

Yesterday I was unable to complete my report as usual, but I can tell you what I did manage to do. I have managed to complete the transformation of my RSI indicator into an automated trading system that opens and closes trades based on customisable settings. I have begun testing the system on a selection of markets including forex, indices and commodities and am going to wait for some results before publishing signals and offering the product to the public.

Not only is the system now complete, but I have managed to install the system into the cloud so it can run continually, all day, every day, without me needing to have my computer on. So I will be able to access the trades I want to enter, completely automatically, without missing another opportunity again. I look forward to seeing the results.

Dax Analysis

If you look back to May last year, we reached brand new highs of 10,048 and were then thrown into an approximate 17% decline down to 8,351 before proceeding to make a further new high, a loss of around 1700 points. We are now finding ourselves in a similar position where we have already dropped 1600 points and found ourselves at some key support.

My thoughts are that many traders are worried to begin buying the Dax because of the looming Greece saga, but are ready to pull the trigger at any moment, especially if good news comes around. I think that we have a good chance of seeing an US lift-off at some point this year, perhaps September rather than today. Of course a surprise lift-off today will certainly create some noise and a ridiculous surge in USD strength, perhaps then eventually cascading towards an increase in the Dax, given their trading partnerships, but I think a surprise hike is unlikely.

Disappointing ZEW data had little impact on the already poor start to the morning yesterday and we recovered strongly overall to post a bullish looking candle on the daily chart, once again touching the extremely influential 200 EMA. When candles have a pin-bar-esque quality, in the opposite direction of the previous underlying trend, I like to look for a spike in trading volume which suggests a reversal is remaining relatively steady, but we are missing that signal to suggest this is the end of the fall. I am not ready to buy yet, so I still ask myself whether we can move lower.

Dax Support & Resistance

Daily R211258
Daily R111161
Daily Pivot10979
Daily S110882
200 Day EMA10821
Daily S210700

Dax Charts

We still hover around the median line of the long-standing fork from the daily chart, spanning back to 2010. The 200 EMA is acting as confluence and whilst the bounce may take a few months to fully materialise, perhaps September, a swing trader is certainly watching these levels carefully.

Dax Daily Chart
Dax Daily Chart

The bearish four hour chart channel is interesting right now because once again we have reached the floor and bounced (temporarily) closing above the 38.2 fib line from the Oct-Apr swing. We briefly pierced the 10854 fib, but failed to close below. I think we can certainly break and stay below and if we do, then we can perhaps look for a mid-term target of 50.0 fib at 10379, except for one thing and that is the five year trend line floor which currently sits around the 10500 zone and climbs every day. So this will likely provide some automated traders with a perfect buying opportunity and chance to ride a bounce, contradicting what I just mentioned about 10379. An interesting battle to watch and one I suspect could provide the increase in trading volume.

Dax 4-hour Chart
Dax 4-hour Chart

We have already reached the weekly S1 and are in the lower half of the regression channel. I am bearish, but refuse to sell the market (unless my automated trader decides there is an opportunity).

Dax 30-minute Chart
Dax 30-minute Chart