Dax Technical Analysis 04/11/2016

Good morning traders!

Brexit news releases pretty much dominated traders’ attention yesterday with the court ruling that UK PM Theresa May must hold a parliamentary vote before triggering article 50. It provided a catalyst to the GBP but opened up further debate on how this ruling is going to affect the pending Brexit agenda.

Gold has also been making some interesting moves, from a personal perspective, because I have been trading it, and US equities have followed their European counterparts to spend most of yesterday on the bearish side.

On the Dax yesterday we have touched the daily 200 EMA, after posting yet another bearish daily candle bringing the current move up to over 500 points now without correction. Early trading from this morning has continued on we have made new lows, although only barely right now (10292).

Today we have NFP, so perhaps expect some slowing down of price in the build up to that and then the usual volatility afterwards. I won’t be trading during that release, or sending out any signals, but good luck and have fun if you decide to do so.

I have been keeping an eye out for a potential long on USDJPY and short on EURUSD which suggests a buy on the Dax. I just want to find the right level and wait for the signal to do it. Many traders are jumping on the bearish wave and this tend to be a good time to run the other way, but the uncertainty around the US presidential campaign, it makes it more hazy.

Technical Analysis

On the daily chart I am watching for a break or hold of 10180 which was the low in September. A break opens up the 10075-10100, which has been pretty strong in the past, to aim for as a target. A hold can offer a bounce opportunity.

On the hour chart we can add one more additional layer of support into that, 10265. Towards the end of September we bounced from this level before creating the 10180 low.

On the 30 minute chart we are way below the weekly S2 (pivot point indicator) and the S3 is the 10180 I mentioned earlier. If we get a pullback, 10350 may provide some resistance. As I write this article, the London open has seen a further drop to 10275. It’s tough being a bull right now.

On the 5 minute chart, we are quickly approaching the S1 for the day, we are finding bullish divergence regularly but of course when you’re in a strong trending move (lower in this case) sometimes you will receive false signals. That’s why when you trade those signals your risk management is crucial, so you can afford the losers.I may look to the higher timeframes to find the divergence signals.

Dax Support & Resistance