Dax Technical Analysis 23/07/2015

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Good morning traders!

Tech stocks continue to weigh heavily on the stock markets at the moment and profit taking is also having an effect as the markets took another tumble yesterday. Whilst Greece certainly looks to have started the ball rolling in terms of conforming to the creditors wishes, it still seems investors are a little concerned about the effects of the Greek vote and have closed their positions.

At the moment, short-term we are bearish and a break below yesterday’s low could see us begin a move towards 11360 which is both the 0.382 fib from the most recent swing from early July and the weekly S1. This is a further 200 point drop and at the moment, the market seems to want to move that way. Bulls can be patient and hold for a decent entry lower down. If the bearish momentum continues to take hold, we could well see a test of the previous support up around 11635 before heading lower which will catch many bulls out, who believe it’s the start of a reversal. The move could even fall as far as 11250.

We are bearish below 11640 in the short term, but longer term we are still bullish above 10650, so take it whichever way you prefer.

For today the R2 of 11651 could limit any further move to the upside and a break above this would signal a return to bullish price action. I would be watching a reaction to 11600 as this could be a potential place for a bounce lower. I would be surprised to see us move much below 11400 today. It’s slightly tenuous, but there is a short-term wedge developing which could be interesting to trade on a breakout. See the 5-minute chart.

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Dax Support & Resistance

Daily R211651
Daily R111593
Daily Pivot11539
Daily S111481
Daily S211427
200 Day SMA10935

Dax Charts

2Dax Daily Chart
2Dax Daily Chart

You can faintly see the bollinger band included on this chart, (settings of 34, 3) and we are right in the middle, nothing unusual making it less simple to decide directional changes. Downside seems most likely which the market settles.

3Dax Intra-day Chart (4 hour)
3Dax Intra-day Chart (4 hour)

If downside continues, then weekly S1 and 50 fib are interesting levels to watch.

4Dax Intra-day Chart (30 minute)
4Dax Intra-day Chart (30 minute)

Wedge pattern developing. The pivot levels today are somewhat compressed, but 11600 could be an interesting “fake break” zone.

5Dax Intra-day Chart (5 minute)
5Dax Intra-day Chart (5 minute)