Good morning traders. At the end of last week, investors and traders continued to relax regarding the trade dispute between the US and the EU. In addition, strong growth data from the US created a bullish trading environment. All in all, therefore, it can be stated that the “risk appetite has increased […]
On the daily chart we have reached one of the major bull targets 11430 and are currently in a major resistance zone, set by price action from a similar period last year. We have already extended 100% of the range, which was broken this month and at the top of the trend channel with RSI being firmly overbought, so the opportunities to buy at current price would probably appeal to only a handful of investors, normally those who like to scalp.
On the daily chart, I am still concerned about going long right now, because although we have pierced resistance, we are printing candles that could be perceived as exhaustion candles. We are slowing down and this could affect the strong momentum that we have seen. We are over 1000 points higher than we were at the beginning of the month and we have barely seen any correction, so I would like to buy at a better price.
We are bullish above 11150 and short term bullish above 11350.
An interesting setup for bears is a short from current position, with a stop above 11475, targeting a move back towards 11425. I doubt I will take that. A pullback to that level, which was the R1 from yesterday (pivot point indicator) could interest me to go long. Bulls will also take encouragement from a break above 11475.
On the H1 chart, we can still see the horizontal range lines from November (the range between 10570-10800), what is interesting at the moment is that a Fibonacci retracement from the December low to the December high puts the 61.8% retracement on the previous 10800 resistance. This would provide an excellent technical confluence, should price correct from current levels down to those levels, because it would allow us to buy down there with a fairly high probability that the support would hold. But let’s be honest, the Dax doesn’t often care about pretty patterns on a chart.
Short-term we are bullish above 10335 and need to take out 10400 to continue the trend. We are still consolidating on the smaller time frames, 10360 seems to have held price so far. At the time of writing we put in a tweezer formation on the 5m chart and this could be seen as a buying signal. The problem is, as I mentioned earlier, that we are already so high, it’s difficult to find demand here.