m5 Chart - Dax Technical Analysis

Dax Technical Analysis 31-05-2017

Hello traders and welcome to the Dax Technical Analysis 31-05-2017. Let’s take a look at the points from yesterday first.

Ranging on the hourly chart

We have to go back to the 18th of May to find the start of this current range. The range is beginning to narrow and compress suggesting that we are coiling up ready for a break. There is no major progress to update on at the moment. Yesterday we ranged between 12564 at the low and 12648 at the high. The range remains between 12475 – 12725. So long as we remain there, we are trapped and moving sideways.

Emerging concerns in Greece

This will be an ongoing issue for the summer. We can add Italy to it as well. The worries over Greece are not fading yet even though Tsipras is attempting to reach a political solution. Athens are denying it, but speculation is that Greece will simply decline the next bailout. This will trigger the next wave of uncertainty. Italy and Greece are an important combination of stories to keep up to date with.

Jasper Lawler of London Capital Group explains:

Talk that Italy will spice up Europe’s political landscape again with its own snap election is unsettling the idea that Europe is now free of populist risk in 2017. Former Italian Prime Minister Renzi has suggested Italy could hold simultaneous elections with Germany in September. Not to be left out, Greece may opt out of its next bailout if debt relief deal isn’t struck, adding to the potential for market disruption.

European assets need the three pillars of stronger economic data, higher political risk in the US and reduced political risk in Europe to outperform. Italy and Greece could are holding the sledgehammer that could knock down one of those three pillars.

5-minute 72 28 14 RSI Indicator

This is the first indicator I made and was the main ingredient to my early trading algorithm in 2014. Its beauty lies in its simplicity. It alerts you when price returns from an overbought or oversold zone, using RSI. I like to use RSI when prices are trading sideways. It is currently on a 5-minute chart. Set up with 72 28 zones and 14 periods.

Yesterday, it provided a couple of buying signals, today a sell signal. It will alert you when the opportunities are available and it will work on any market. You can learn more about it here.

RSI Indicator
RSI Indicator

Dax Technical Analysis 31-05-2017

Keep an eye out on the developing head and shoulders pattern from the daily chart. Especially if we break below the low from yesterday and continue to forge lower lows. This pattern would suggest a bearish reversal. Moving down to the hourly chart, we remain trapped in the range (mentioned above) and await a break for a further steer.

I am neutral at the moment, so I am looking to play the range. I had to pick a direction to trade, I would probably remain bullish. Intraday I would be interested in buying at 12575 with a fairly tight stop. Despite the fact that sentiment is beginning to turn bearish and we are heading into the quieter summer months.

On the 5 minute chart the Bollinger bands are still pinching and I am considering a breakout setup, especially if we see a pick up in volume.

The market may not have provided much excitement for the past week or so, but something is building.

m5 Chart - Dax Technical Analysis
m5 Chart – Dax Technical Analysis

Dax Support & Resistance

KEY LEVELS
Open12611
High12648
Low12564
Close12587
14 Day ATR106.91
200 Day EMA11595
Daily R212685
Daily R112636
Daily Pivot12600
Daily S112552
Daily S212516
Range84
Change-0.19%

What To Watch

  • Italy and Greece updates
  • Head and SHoulders on the daily
  • Range on the hourly
  • Bollinger bands pinching on the 5m