Morning traders. Scanning through the headlines; we see that Merkel has pretty much picked her apparent heir in AKK (Annegret Kramp-Karrenbauer), which is a name that will likely become more familiar down the line. The ‘far-right’ AfD is now the second most popular party in German right now, according to an INSA poll (although the AfD considers themselves conservative). So this means the popularity of the SPD has plummetted and the election saga continues. So if and when a government finally connects together, it will have been, more-or-less, six months in the making.
Looking at the economic calendar, the Economic and Financial Affairs Council Meeting goes on for most of the day. We see the Swiss trade balance numbers at 7am and then the ZEW at 10am. The survey asks around 300 experts about their expectations concerning the economy, inflation rates, interest rates, stock markets, and oil prices for the next six months. It can have a medium impact on the DAX.
20-02-2018 DAX Analysis
Watching current levels or 12275 for longs
Watching 12430 for shorts
Yesterday we discussed looking for longs at 12469 and 12403. These were higher volume nodes from Friday and could offer support for longs. However, the ideas did not work out. I took a trade around 9am, which was stopped out within 10 minutes and that was me done. Given the fact it was a Monday and a US holiday, the second half of the session didn’t look appealing.
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The session ended up quite a bit lower and you’ll see in this chart how the price action is working the Action-Reaction line set. The minor swings are bearish and remain intact. Perhaps we have now found support here.
In order to have any bullish hope, we have to take out 12435 with some strength. Otherwise it could be sell-fest again.
The profile from yesterday was ugly, it looks to have all but engulfed Friday and closed at the bottom.
It’s not an encouraging sign for buyers at the moment.
The POCs to the downside are now gone so I would still like to see another attempt to take out those above.
The Bullish Divergence is still the main positive idea
20-02-2018 FTSE Analysis
Watching 7280 for shorts
Watching 7200 for longs
Despite it’s slower tempo that the DAX, the FTSE is a market that is more enjoyable to trade as volatility picks up.
At the moment, the FTSE has broken (or threatening to break) the centre line visible on this chart. There was a fast move down to the current price from the shaded box. As this fast move down left behind so white space, I would like to treat that move as a gap and anticipate that gap filling. That idea would depend on price breaking back above the centre line. Alternatively, a continued move lower could target the reaction line at the bottom of the Action-Reaction line set.
Double distribution on FTSE
See the low volume node in between the two high volume nodes on yesterday’s profile? I wonder whether price trades within that zone, to fill it out a little bit. Eat up some time. It has already taken out Thursday and Friday’s POCs.
If price heads higher, then the obvious targets are the POCs above.
20-02-2018 EUROSTOXX50 Analysis
Watching 3375 for longs
Watching 3440 for shorts
This chart looks similar to the DAX.
We can see price has moved quickly away from the double top posted in the morning. The gap was closed and the move continued, for most of the day, to the downside. If you draw a centre line through a few of the recent higher lows, you can plot an Action-Reaction line set.
Price has closed almomst on the ‘reaction’ line. So I will watch to see if those levels are respected today.
After discussing this wedge in yesterday’s article, it is now much clearer to see on the chart. Notice also how we have broken the 3420 and 3408 level. The 348 is the ‘second swing back’. That could be important to note.
