19-11-2018 Dax Technical Analysis

Good morning traders. I hope you all enjoyed your weekend. It was a great week here last week, despite the politics and Brexit chaos causing some unusual price action. Let’s take a quick look through some of the headlines.

Headlines

Theresa May says there is no alternative plan for Brexit and states that getting rid of her will not make the process easier. A US-led coalition airstrikes in Syria kill 43 people. Macron is struggling at the moment with one person dead and dozens wounded in French fuel protests. Trump hints at government shutdown over border wall funding. Germany to open its market to Uber by 2021 says their transport minister. Pence warns China tariffs could ‘more than double’. Over 1,000 missing, 71 dead in California fires. Bitcoin Cash falls following hard fork.

Technical Analysis

Last week the DAX dropped 1.7% closing at 11372 (CFD). 

On the daily chart, we can see a number of large tail candles over the last few days. These large tail candles suggest that the market is rejecting lower prices. So I decided to build a study to look at previous situations where we had these types of candle. The logic for this study is simple enough, there are three things to ask for (on the daily chart)

1. Is the tail over 100 points?
2. Is the candle body less than 50 points?
3. Is the top of the candle (wick) less than 50 points

Here is the code (you can copy and paste this into the “Color Bar Based On Alert Condition” study in Sierra Charts:

=and(
(c-l)>100,
(((o-c)^2)^0.5)<50,
(h-c)<50,
)

Right now, those settings don’t provide much of a conclusion, so I am going to amend the settings and attempt to filter the candles to look more similar to the ones we have seen over the last couple of trading days. Perhaps I will look for the candle body to be less than 45 points and the tail to be over 125 points. It’s probably best to measure the previous candles and take our filter levels from that.

Anyway, we digress. The blue diamonds show the previous examples:

Hourly Chart

As for the hourly chart, we can see that last week we attempted to break out of that trading range (highlighted with the rectangular boxes). We failed to ‘close’ below the range, but we certainly pierced to new lows. I will be watching that closely again this week. 

I’m interested to see if the recent high (11450) holds.

If it does hold, and we continue to break to new lows, then traders will be focusing on a move towards 11k. 

19-11-2018 Key Levels

Signals

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