Morning traders, I hope you all had a nice weekend.
Merkel seems to have chosen her next secretary general to replace Tauber. I believe there will be an official vote at the party congress on the 26th. The election saga continues in Germany and tomorrow we should hear some results from a postal ballot. There surely will be a deal. Perhaps the immigration policy remains a sticking point. Let’s also remember we have the Italian elections round the corner, at the beginning of March.
Today is a US holiday so we expect the market to be slower in the afternoon. On the economic calendar we have the ZEW index @ 10am tomorrow.
As for price action, let’s look at some charts
19-02-2018 DAX Technical Analysis
We attempted a long at Friday’s Value Area High earlier, which was quickly stopped out. We are looking for a look around Friday’s Point of Control is 12403. We see three consecutive higher high and higher lows on the daily TPOs and remain bullish for now.
The aggressive long this morning (that was stopped out) was based on a potential test of this shaded zone, assuming that a gap close would find support here.
The fork in this chart is still holding price action and we will continue to watch its progress towards the median line. Failure to reach the ML could offer a shorting opportunity, especially if it fails nearer to the 12650 zone (trend defining level)
The main reasons for remaining bullish on this market are the facts. The minor swings are trending higher. However you can also argue that the bullish divergence is calling for a reversal.
Major swings are bearish below 12650 and the minor swings are bullish above 12275
FTSE Technical Analysis
Watch 7312
A break above 7312 does not necessarily open the floodgates to higher prices, however a strong break above 7365 could.
We see bullish divergence on this market too, so are looking for opportunities to take a long.
There are exposed Points of Control above current price and these are the targets we are looking for (although only one is on show in this chart). We were considering waiting for a move into the Friday value area, perhaps even a tag of the Thursday POC (lower than current price) before getting long.
EUROSTOXX50 Technical Analysis
This wedge pattern is not very significant, but the minor swings (visible on the chart below) are.
I am bullish above 3408 with a potential aggressive long from 3420.
The targets for longs would be these exposed POCs (above us). If we head lower, then I am going to wait for a test of the POCs at 3397 or 3359.
19-02-2018 Dax FTSE and Eurostoxx Key Levels
19-02-2018 Dax FTSE & EuroStoxx Video
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As a trader you will lose a lot of trades. But that’s ok.
Would it surprise you if I said that you can still make money if you lose 60% of my trades? This would mean you only win 40%.
The reason you can do this is because you will learn to be disciplined and use solid risk management. You will trust your analysis and be able to set and forget.
I trust my trade setups, I believe my analysis, and I am happy with the probabilities of my trades.Understanding the probabilities of losers is key.If every trade risks 1% and every trade earns 3:1 and every trade is set and forget, then look at this example:Win rate: 40%Number of trades: 100 tradesOver this 100 trades, I would have won 40 and lost 60.The 60 losers would have hit the account by -60% (60 x -1%)The 40 winners would have increased the account 120% (40 x 3%)Overall, you make money. Even though you lost a lot more trades than you won.It’s an elementary rule.
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