Dax Technical Analysis 26/01/2016

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I am sure many traders sick of hearing the same things again and again: China slumps, Oil prices slump, ECB could cut rates, Fed might slow their hike path, so on and so on. But the factors are causing lots of volatility in the markets at the moment, which can either create the opportunities for traders, or chop them up.

Bearish View

Bears still seem to have the edge right now and there are a few trading opportunities shaping up to the downside. We are currently approaching 9700, which is previous support and provide resistance plus it’s almost a perfect extension of this morning’s rally from the daily low. This entry provides a half decent risk reward opportunity. I am not quite sure whether you’ll hit a Felix Zulauf type trade and get to 7,000, but there could be an opportunity to go and test the recent lows.

I am personally watching for another test of the major low and see whether we get any positive divergence on the oscillators to suggest a slowing of bearish momentum and a even a reversal opportunity.

I am liking the idea of a 9700 short, stop around 9780 and targeting 9500 or 9432.

160126 Bearish Trade Setup
160126 Bearish Trade Setup

Bullish View

It’s pretty gloomy for Bulls. Commodities are weighing on equities, traders are pulling short positions everywhere, the trend is heavily bearish and outlook doesn’t seem to buoy the sentiment much, so I guess it’s a waiting game. Waiting for a much lower entry and just sit tight. I am watching to see if we get a reaction to 9475 for a possible long. There could be two choice of stop loss, either below the left shoulder from mid January, or the major low of the 20th. A long reaction here will almost certainly complete a head and shoulder pattern which can provide a decent trade setup. The neckline is not great, sloping up towards 10k, but nevertheless, it’s a setup. I can’t say I am in love with this setup right now…

160126 Bullish Trade Setup
160126 Bullish Trade Setup

Dax Support & Resistance

KEY LEVELS
Daily R29898
Daily R19784
Daily Pivot9727
Daily S19613
Daily S29556
200 Day SMA10542

Dax Charts

05 m30 Dax Chart
05 m30 Dax Chart
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03 H4 Dax Chart
03 H4 Dax Chart
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02 Daily Dax Chart
02 Daily Dax Chart
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06 m5 Dax Chart
06 m5 Dax Chart
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09 m10 Dax Chart
09 m10 Dax Chart
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