Dax Technical Analysis 20/04/2017

Hello traders!

A quick overview of the main stories; regarding the French Presidential the polls have Macron at 25%, Le Pen at 22%, Fillon at 19% and Melenchon at 19% and the 2nd round poll has Macron beating Le Pen with 66% support, Macron beating Fillon with 58% and Macron beating Melenchon with 60%. ECB’s Villeroy stated that negative rates clearly have their limitations and that the current policy stance remains fully appropriate. Brussels has begun freezing British companies out of multibillion-Euro contracts, with top EU officials also calling on companies to consider an EU based office to maintain permission to conduct business. The Fed could start shrinking the balance sheet soon and a Russian government think tank controlled by Russian President Putin developed a plan to swing the 2016 U.S. presidential election to Donald Trump and undermine voters’ faith in the American electoral system, according to US officials.

Turning to the Dax, it has been a real struggle for me this month as a Bull, we’ve been bearish all month and despite good economic times and the best efforts of the euro zone’s central banks, German businesses remain reluctant to borrow and to invest. Insecure outlooks, thanks to US trade policy and the Brexit, are perhaps to blame, but it seems the additional risks that are presenting themselves globally are creating difficult conditions for companies to effectively plan long-term. It’s unusual because the average cost of a loan in January was 1.7%, a new record low, banks hardly earn anything from these loans but they continue to want to lend more. Companies are just reluctant to borrow. The ECB are still pumping money in the financial system, although it’s more likely to benefit the ailing economies (Italy and Greece) than Germany, but the market dynamic is currently throwing me plenty of confusion.

The Dax is ‘trying’ to stay positive, but there is plenty of head-wind.

Yesterday price found support just above the 11950 low from the previous day, but traded in a much smaller range than normal at just 72 points, losing around 0.13% on the day. Price traded in between the daily pivot and the daily S1 (pivot point indicator) all day, unable to break any higher than 12039. The only point of interest for me yesterday was that price attempted to test the pivot twice, and eventually fell to new daily lows after the second attempt. Today has already taken out the high and low of yesterday and ranged between the S1 and the R2, but ultimately still hovering just above the 12,000 level, again.

Looking at the hourly chart, there is a clear trend channel (bearish) and we have recently tested the channel support, if price bounces from here and remains in the channel then 12100 is a reasonable target. There is bullish divergence on the hourly chart, so if this move does complete then an interesting entry to me would be in the 11975-12000 zone. On the 5 minute chart we have entered back inside the bands and tested the mid-line (currently around 12050) before settling at the R1 (at the time of writing) and it’s looking pretty good for a selling opportunity, so once more, mixed signals.

Call me a hopeless optimist, but I am still watching for moves higher.

Dax Support & Resistance

14 Day ATR122.22
Daily R212064
Daily R112018
Daily Pivot11992
Daily S111946
Daily S211920
200 Day EMA11270

Dax Charts

03 H1 Dax Chart
03 H1 Dax Chart
05 Dax m5 Chart
05 Dax m5 Chart