Thursday 22nd August

I started the day today with a short and was quite quickly stopped out. That’s fine for me, I prefer to be wrong with a fast stop loss than one that beats me by a single point. The money-management strategy that we use (the 4 to 1 reward) means we can potentially lose four out of five trades. Stop losses are part of the business I don’t mind about them.

On the hourly chart, we can now see the price has broken clearly above the trend defining level. So the question is now where will price what to go next? If you look left you can see the price has attempted to break above 840 a number of times and failed. So this is a difficult zone to beat, with sellers still looming in this area. A failure here could be very significant.

If the DAX does manage to break above 840 then the obvious target will be 12,000 this would be very close to the upper median line parallel of this pitchfork.

Notice that price broke above the median line, then found the quartile twice and pulled back to the median line. One of the tenets of the median line theory is that price will go on to reach the next median line in these situations. There are never any guarantees and trading, there are only probabilities.

No Video Today – Back Tomorrow

Dax Technical Analysis: Week 34 1

DAX Major Trend

The major DAX trend is now unclear as the trend defining level was broken this morning.

Dax Technical Analysis: Week 34 2

DAX Minor Trend

Watch the resistance zone as this was tested again today and there’s another failure. 

Method Price
VWAP 11771
Point of Control 11785
Value Area High 11806
Value Area Low 11772
Pivot 11739
R2 11939
S2 11539
Purchasing managers from Germany’s private sector reported an expansion in activity for this month where the rise in the nonmanufacturing segment narrowed to a seven-month low, IHS Markit said on Thursday and added it learned from producers that their output dropped but less than in July. The composite index advanced by half a point to 51.4, compared to the neutral 50-point mark.

The services item slipped by just 0.1 points to 54.4. The manufacturing headline came in 0.4 points stronger at 43.6 and output advanced 1.6 points to a still fairly weak 45.8.

“Although improving slightly, the survey’s output data haven’t changed enough to dispel the threat of another slight contraction in GDP in the third quarter, especially given the deterioration in the forward-looking indicators… Cracks are starting to appear elsewhere in the services data, with inflows of new work barely rising in August and business confidence at its lowest for almost five years” together with a plunge in the manufacturing outlook to a record low and flat hiring, principal economist Phil Smith said.

Dax Technical Analysis: Week 34 3
Dax Technical Analysis: Week 34 4

Wednesday 21st August

The DAX tagged 760 yesterday which was inside the blue marked zone that we have mentioned over the last week or so. The question I asked was whether sellers were still sitting up in that zone and the answer was clearly yes. Although we did not see the same reaction that we saw on the 13th. 

Notice below on the minor trend chart that the price is finding support on the top side of the median line (see the red arrow).

 Watch for a break above 11706 (the value area high) for a second attempt at the sell zone. The R2 is 811.

No Video Today – Back Tomorrow

Dax Technical Analysis: Week 34 5

DAX Major Trend

The Major DAX trend is technically bearish below the trend-defining level of 11851 after a clear series of lower lows and lower highs. 

Dax Technical Analysis: Week 34 6

DAX Minor Trend

We have passed the fork median line, reacted in the previous ignition zone and retraced back to the median line.

Method Price
VWAP 11677
Point of Control 11637
Value Area High 11705
Value Area Low 11625
Pivot 11662
R2 11811
S2 11512

European shares were muted in premarket trading on Wednesday as Italy’s coalition row led to the resignation of Prime Minister Giuseppe Conte. Italian President Sergio Mattarella will now decide whether to call an election or form a new coalition.

In Brexit developments, UK Prime Minister Boris Johnson asked the EU to replace the “anti-democratic” backstop with a “commitment to put in place such arrangements as far as possible before the end of the transition period, as part of the future relationship.” However, European Council President Donald Tusk dismissed the request.

Tuesday 20th August

European stocks were slightly higher in premarket trade on Tuesday as reports suggested the European Union dismissed demands from London to remove the Irish backstop from the withdrawal agreement between the United Kingdom and the EU. Investors remained focused on global trade and the US-China trade talks after Vice President Mike Pence revealed Washington sees Hong Kong’s integrity as a condition for a trade deal with Beijing. Meanwhile, a trade group, that includes major US tech companies, slammed France for introducing “discriminatory” digital tax on US firms.
Dax Technical Analysis: Week 34 7

DAX Major Trend

The Major DAX trend is technically bearish below the trend-defining level of 11851 after a clear series of lower lows and lower highs. We are trading around 11700 at the time of writing, which is approaching a key ignition point from the 13th/14th. Sellers were found here previously.

Dax Technical Analysis: Week 34 8

DAX Minor Trend

The DAX continues its bullish reaction leg since placing the major low at 11257. We have passed the fork median line and have actually reached the next quartile line – I will show you that tomorrow in the video, it will be easier to explain. Potential major resistance zone!

Method Price
VWAP 11686
Point of Control 11701
Value Area High 11734
Value Area Low 11668
Pivot 11666
R2 11846
S2 11486

DAX Market Profile

A normal distribution day on Friday, looking at the first chart. On the second chart we see a nice trending day from the start, with two interesting ‘single print’ support bounces (C and H) just below the market profile value area.

Dax Technical Analysis: Week 34 9
Dax Technical Analysis: Week 34 10

Monday 19th August

Sentiment is upbeat this morning in Europe while government bonds in Germany retreat, meaning yields were off the lowest levels ever. Olaf Sholz, the minister of economy in the cabinet of Chancellor Angela Merkel, expressed readiness to approve €50 billion more in spending in case of a downturn. While vowing to take action if necessary, he still said finances must be disciplined. Of note, risk appetite was especially buoyed by China’s tax reform in the corporate sect

Dax Technical Analysis: Week 34 11

DAX Major Trend

The Major DAX trend is technically bearish below the trend-defining level of 11851 after a clear series of lower lows and lower highs. We are trading around 11560 at the time of writing, which is halfway between the major low and the trend-defining level.

Dax Technical Analysis: Week 34 12

DAX Minor Trend

The DAX continues its bullish reaction leg since placing the major low at 11257. We are approaching the fork median line and also the bottom section of the value area, visible on the volume profile to the right.

VWAP 11512
Point of Control 11549
Value Area High 11567
Value Area Low 11496
Pivot 11518
R2 11672
S2 11363

DAX Market Profile

A normal distribution day on Friday, looking at the first chart. On the second chart we see a nice trending day from the start, with two interesting ‘single print’ support bounces (C and H) just below the market profile value area.

Dax Technical Analysis: Week 34 13
Dax Technical Analysis: Week 34 14