Dax Technical Analysis 31/10/2016

Good morning traders!

The dominant technical pattern at the moment is still the spinning top/doji on the daily chart which formed at resistance and has since carving out what appears to be a reversal, or at the very least a pullback. This was pretty much the highlight of last weeks trading.

For the first half of last week we had broken above 10721 and found new highs around 10830 but came crashing down through the 10721 to find ourselves trapped in a range for the rest of the week, regularly bouncing between the 10645-10721 range. Today we find ourselves at the bottom of the range and giving traders that common choice: is this is the time to buy (range support) or sell (breakout lower).

If it’s a range bounce, then traders can go long from 10650 with a stop under 10625 and look to go for 10700 again, 2:1 reward. If it’s a breakout lower, a sellstop under 10625 could be interesting but there is pretty strong support around 10600, so the reward is not so great. Perhaps a sell from high levels would make more sense.

The SPX is testing support at the moment with traders looking to target 2120-2125 zone (bearish for Dax). Gold is still retracing the previous gains from last week (bullish for Dax) and the Dollar index seems to losing some momentum (bearish for Dax). My algorithm is currently pointing towards bearish signals and looking for the opportunity to go short.

Just be aware of the GDP and CPI figures due out today. Because these numbers could provide a catalyst and drive price action for the next few days.

Dax Support & Resistance

Daily R210786
Daily R110718
Daily Pivot10649
Daily S110580
Daily S210511
200 Day EMA10305