Dax Technical Analysis 23-05-2017

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We are currently in a symmetrical triangle formation on the 5-minute chart. The price reached the R2, S2 and settled on the daily pivot yesterday. We are in the middle of two key support-resistance zones on the hourly chart. Are any of these significant? Let’s have a look with the Dax Technical Analysis 23-05-2017.

Daily Chart – German Dax

The first chart to look at is the daily chart because I have noted a few point here. The Dax is trading close to the highs and recently saw an ascending wedge formation fail [1]. Price is now trading around 200 points lower and perhaps may reach the 12400 support [4]. Should price reach that level, we are creating a head & shoulders formation, with the left shoulder [2], head [1] and right shoulder [3]. Keep an eye out for that, because if that pattern does play out, we could see a further 400 point move back down towards 12000.

Daily Chart - Dax Technical Analysis
Daily Chart – Dax Technical Analysis

Hourly Chart

We are currently in the middle of two key zones here. The all-time highs of 12830+ and the support of 12400. The price is hovering around the mid-point of those two technical levels. We have a rising trend line supporting price in the short-term, so I am watching for a break or hold of this level to indicate the possibly next move. A break lower suggests a move to 12400, a hold above suggests a move to the highs again.

The Dax is currently bearish according to the recent daily fractal, so let’s consider that. A swing-trade short from current levels doesn’t provide an excellent reward to risk ratio, unless a trader wanted to target 12100, with a stop loss of 12900. Otherwise, an alternative option is shorting with a stop loss above 12700, looking to target 12450.

Hourly Chart - Dax Technical Analysis 23-05-2017
Hourly Chart – Dax Technical Analysis

Dax Five Minute Chart

A symmetrical triangle is often used in Dax technical analysis, but perhaps too frequently. I don’t really believe there is much weight behind this formation. It normally occurs in directionless markets, most commonly after a large move, most often on a short time frame. In this case, it ticks most of those boxes, so it’s probably a red herring, ignore it.

We did, however, reach the daily R2 yesterday, followed by the daily S2, then settled almost exactly on the daily pivot. A near perfect textbook example of trading the most common pivot ranges. As pretty as the pattern is, I can not really see much significance in terms of opportunities, but I am watching for a break.

m5 Chart - Dax Technical Analysis 23/05/2017
m5 Chart – Dax Technical Analysis

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Dax Support & Resistance

14 Day ATR122.17
200 Day EMA11521
Daily R212748
Daily R112687
Daily Pivot12627
Daily S112566
Daily S212506

Dax Technical Analysis 23-05-2017 written by Chris Bailey