Does this mean that we are reversing?
Not necessarily, no. To decide this, we need to establish the trend-defining level. In my opinion, that is still 12850 and we remain bullish above that. (The normal trading disclaimer and warnings – at the bottom of the site – apply to any content on this site)
16-05-2018 Dax Analysis
If we take a look at the profiles below, we can see that yesterday we took out another POC. This highlighted by the higher of the two red lines. The red lines are pointing at the naked POCs from last week.
We can also see a double distribution day on the profile from yesterday. Notice how the low-volume area in the middle of the two distributions straddles the POC from Monday. Also, notice how Price has found support just above that low volume zone. I would like to see whether price slices through that zone or holds it.
This is a strategy that is very effective on the Dax30.
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Notice in the chart below how price responded to the zone. When price action responds like this, it builds great confidence in the tools that we use.
Having an understanding of the way price moves can greatly improve our performance as a trader.
I find this next chart interesting because of the way price is responding to the fork.
This chart shows a regular pitchfork. Once the price responds from the third pivot (pivot C), it uses the LMLH as a platform to bounce. From the LMLH price shoots straight up to the ML. Once the price reaches the ML, it reverses.
This is textbook Dr Alan Andrews theory.
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Finally, this chart is the 20-minute chart and the black swing markers show the current major swings.
The way I see things: The market is bullish above 12,850.
If this recent low holds, then we have a potentially interesting new major fork. I will continue to watch how this develops.
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