23-11-2017 Dax Technical Analysis

Good morning traders and welcome to the 23-11-2017 Dax Technical Analysis. Yesterday was a disappointing day for me personally as I had two trades, both of which were losers and the winning streak was ended. Today we are in two new trades, one on the DAX and one for FTSE, both trades started well so we moved the stop loss to break even. Already it is a much better day.

Dax Price Action (Yesterday)

I am starting to form an idea based on the work of Alan Andrews. The idea is based on the Action Center Reaction methodology. I drew a simple trend line above the recent lower highs ([1], [2] and [4]) and wondered whether, in time, this may become a median line. With that in mind, I wanted to look for the action point, as price accelerated to lower levels yesterday. If I use the low of yesterday as an action point, it allows me to project a potential reaction point on the other side of the ‘median line’. It is heavily speculative, but an idea I am going to nurture.

There was another example of a balance point yesterday [5] during the move lower ([4],[5] and [6]) and price found support around 966. The question to ask at this point, as it is at any point of significance, is whether there will be a bounce, or an expansion lower (an additional move lower), or is it a wash of the lows (wiping off the stop losses, leading to a quick recovery). Today we find the answer.

23-11-2017 Dax Outlook

This morning we answered the question from yesterday evening. The answer is a wash. The price action wiped out the stop losses under 966 and recovered quickly, providing a nice example of a wash.

Today, we are looking for the minor swing low to hold (see the 60m chart below). If the price action holds this level then, we would expect, in the short-term, to test the 13050 mini-consolidation zone from yesterday. Beyond this, we have a solid foundation to continue forward in the search to break to new highs and resume the overall major swing.

We are bullish and we have long positions open.

See the trades here: https://goo.gl/N6yoGK

Trading Rules

I mention these rules nearly every day in my own webinars, but John held the webinar today and he also mentioned the rules. So it reminded me to post it here as well:

• Never risk more than 1.5% of your account on a trade, most often stick to 1%
• Understand the major and minor swings – these are facts and not opinion
• Use the swings to understand whether the trade is trend following or counter-trend.
• Always achieve a minimum of 3:1 reward to risk on a trending trade and 4:1 on a counter-trend trade
• Once you’ve entered a trade, stick to the plan. Let the trade play out (set and forget)
• Know your win rate. Following a 3:1+ discipline means you can afford to be wrong very often and still make a profit overall.
• Don’t fiddle with trades, don’t take partials and don’t close them early unless absolutely necessary
• Record every trade including the context, reason for entry and the result. Analyse every result afterwards
• Invest in a good charting platform and a good record keeping system
• Good records allow you to learn the probability of the tools that you use

23-11-2017 Dax Charts

Daily Chart – Major Swings

• The major swings are bullish above the 11868 low
• We are currently in a retracement leg below the 13535 high
• The longer-term bullish target is the UMLH (upper median line parallel)
• The retracement leg could reach the ML (median line) of the bearish fork
• A potential confluence of levels between the LMLH (lower median line parallel) of the old fork and the ML of the new fork. So if the minor swings (next chart) continue moving down, that would be a strong candidate for a bearish target.

23-11-2017 Dax Major Swings

60m Chart – Minor Swings

• Clean minor swings lower (LL and LH – Lower Lows and Lower Highs) = bearish trend
• The double bottom before the forks was the beginning of the trend switch and a higher high confirmed the end of the trend.
• There is a light grey fork which shows price touching the ML – a good spot for bulls
• The new fork is a bit fishy because the low is not confirmed, however, the median line of that new fork would be a target for bulls

23-11-2017 Dax Minor Swings

4m Chart – Bar Level Price Action

• The micro swings will be broken once price breaks the recent lower high
• We will be watching for a break above the quartile on the black fork
• This chart shows the grey fork median line bounce a little more clearly

23-11-2017 Dax Bar Level Price Action

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