Dax Technical Analysis 19-10-2017

Welcome to the 19-10-2017 Dax Technical Analysis. It may be a little later than planned, but I had a gig last night in London and it seems to take an eternity to get back from London on the late train. So please excuse me.

As for today, we’ve seen a nice sell-off, call it a release of pressure if you will. The questions we need to ask are; is this the beginning of a larger corrective pullback? Is this just profit taking from a big player? Is the wider trend still intact?

Sometimes it can be best to take a step back to answer those questions. Take a look at the chart below. We have been talking about the daily chart zooming through the median line, but not yet retracing back to touch it from above. This move would be a switch-back move. However, here we are. The price action looks a little scary intraday because it’s a fast move down suggesting bearish reversal, but we found support at the trend defining low, exactly at the median line. So let’s see if that holds. If it does, there is an opportunity to resume higher.

However, if it doesn’t hold, then we have to concede that the minor swing trend is no longer in place and we could even be ready for a corrective major swing lower. A major swing lower could open the door to visit the previous major consolidation in the 12500-12600 zone. But that is perhaps getting a little ahead of ourselves.

Or is it, considering we are bullish Gold and sometimes you can see a negative correlation between precious metals and equity indices? We will see.

For now, we remain bullish, by a thread.

19-10-2017 Dax Charts

This is a screenshot of the Median Line, mentioned above

19-10-2017 Dax Outlook

Depending on which camp you’re in:
Bulls

Let’s assume that 909 is still the trend defining low* and it holds today; therefore we have made a fast move down but the key level holds. The idea of that move lower was to take out 909 and confirm a broken higher low, effectively ending the bullish technical trend. But it didn’t take out 909, it failed (so far). Instead, price reacted at this level and moved higher, opening up a potential pocket where sellers are now trapped in the 920-940 zone. If we get a visit to that zone once more today and react, it’s a very interesting spot.

We remain in this camp because of the overall daily chart (median line retracement)

Longer term targets 13400

Bears

Bears believe that the argument for 909 remaining the trend defining level is tenuous because it should actually be 964. This is because yesterday’s higher high made us forge a new higher low at 964. And this 964 level was broken with force today. They concede that yes, there was a reaction at a previous level of significance (909), but the tables have turned and the bias is now moved to the downside.

Longer term targets 12500-12600

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