Well, here is the obvious bit. Yes we are overbought, yes we are expensive, but this market wants to go one way right now and that is up. So instead of the usual format of report, I have suggested a few buying ideas to consider.
I think we are bullish so long as we trade above 10950 and I struggle to see price down there for the moment. Of course, if something unexpected happens, then so be it, but fears could be parked temporarily and we are soon to commence the proper money printing. We are at record highs and momentum is strong, it won’t last forever, but dip buying could be a great strategy.
Dax Intra-day chart (1 minute)
If we pull a fibonacci retracement tool from the most recent swing we have a possible buy zone between 11144 – 11175. The swing was identified using fractals from an hourly chart. This assumes that we actually get a pullback from current levels. That’s one option.
Dax Intra-day Chart (5 minutes)
This chart shows five potential buying areas based on areas of recent significance highlighted by the light black ‘blobs’ with horizontal lines indicating the price levels. (Ignore the volume indicator at the bottom) They include previous highs that were broken and also considers a breakout above the recent highs.
Dax Volume Profile Chart
The most obvious points on this chart are the huge low volume pocket between around 11150-11180 when price shot through those levels, around about the time of Janet Yellen’s presser. If we take out the value area high from yesterday, 11199 and continue through to 11180, then the likihood is we head back towards the naked vpoc at 11127.
Dax Intra-day Chart (30 minute)
The pivot levels have been charted here and I like a buy opportunity from either S1 or S2.
There was a heavy sell off first thing on the Dax, as there was no major news stories (that I could see), I suspect the reasons are due to profit taking.
There is a bit of pressure on the Dax at the moment, as it is struggling to breach the 9450 level and a wedge pattern is forming which threatens a break to the downside. Other major markets like the SPX and the USDJPY seem to be experiencing a top leading to a pullback, the Dax may follow suit. The SPX has already breached a similar wedge pattern.
The obvious talking point is the GBPUSD (Cable) flash crash, that was one of the more significant reminders of how brutal the markets can be. Anyone who was holding a long position on the cable overnight, would have woken up to either a margin call or a crazy hit to their account as it tanked 700 pips. And today it’s gone crazy again. So good luck trading it today.
We have broken and closed above the 10227, despite failing to defend the 10080. If I was cynical, I would say that the market makers have cleared out a bunch of stops down there before rallying. But a sensible trader would have placed the stops a lot further down.