Dax Technical Analysis 22/2/2017

Good morning traders!

There you go, another breakout confirmed (bullish) and we have cleared 12,000. Yesterday was a strong sign that the 11875-11900 resistance zone would be pushed aside and now we have opened the door to either a nasty bull trap or a move towards the ‘All Time High’. The setup certainly seems to favour the bulls at the moment.

We are in familiar territory again, because, despite the market roaring higher, the conditions to buy seem to confuse traders because of te market being so overbought, so instead, we wait for a pullback which never seems to come. On the other hand, we have the bears piling up their shorts expecting the next crash because surely this move can not continue with the geopolitical landscape as it is, but yet, it does. For now anyway.

FXCM timed out an attempted long around 8 am as volume picked up, but the algo has no position open at the moment. I am short USOil and bearish Gold and EURUSD but have no positions open on those two. Buying dips are the main strategy on the Dax at the moment, targeting the ATH.


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Dax Daily Chart

Clear bullish breakout candle gaining around 200 points on the day and breaking comfortably through resistance. At these levels, you would have to go back to Spring 2015 to find key zones and those are 12065, 12230, 12380, so the first target is 12065. I suspect these level may provide some opportunities to add to longs (assuming that this move continues).

With the short work made of the 12,000 level, swing traders will be holding on to their longs at the moment, despite the risk of a pullback in the short-term.

01 Dax Daily Chart
01 Dax Daily Chart

Dax Hourly Chart

The breakout is made clearer on this chart with an almost vertical trajectory through 11875, ignoring the bearish divergence signal and being drawn magnetically to 12,000. Bulls will be watching for a pullback to previous resistance, this is a popular buying spot. So BUYLIMIT @ 11875 could be a popular and interesting option, the stop loss choice would be the harder part. Targets being either 12065 or 12230.

03 H1 Dax Chart
03 H1 Dax Chart

Dax Intra-Day Chart

I mentioned yesterday that we could have a Bollinger bounce (bearish) or just as likely we could hug the upper band (bullish), the latter is the clear outcome here, but the fact remains that we are outside the bands and price often likes to revert back to the mean, strengthening the case for a pullback to previous resistance, somewhere closer to 11875. Nothing is guaranteed in trading, so the pullback may never come.

05 Dax m5 Chart
05 Dax m5 Chart

 

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