Good morning traders!
We started the session pretty bearish this morning with a 50 point gap lower, then a quick gap close before a further decline to a lower low for the day. We are currently in a very short term down trend, intra-day and (it’s about 09:30gmt right now) I am watching 9255 to see if we break higher, or continue to move lower.
The close yesterday of approx. 9300 was fairly signficant as it was around a 50% retracements of the daily swing and closed underneath the trend defining level.
So congratulations to all the bears who traded that break under 9320, there have been two opportunities to trade it, firstly the break itself yesterday was a trade setup that could have earned over 100 points and then secondly, the pullback to test it now. I believe many traders are looking to get short again and add to positions, so this could actually keep the market buoyant temporarily before a quick sell off down to test the low of yesterday. A break below the low of yesterday is another setup.
A sell from current levels could be interesting, with a stop above 9320, looking to target 9150 or lower.
Keep an eye on USDJPY (positive correlation), Gold (inverse correlation) and the S&P500 (positive correlation) for confirmation.
Overall, we are bearish below 9320 and my strategy is currently to look for selling opportunities. I have my RSI system set up with a bearish template using a 60 20 RSI with 14 periods on various charts, looking for selling signals. I have a stochastic indicator set up on a 5 minute chart (15,5,5) providing me signals in addition to my RSI software.
For more details on the RSI system, click this link or watch this video
Dax Support & Resistance
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