Dax Technical Analysis 05/01/2017

Hello traders!

I can’t help but look back to 2015, January onwards, regarding price action on the Dax. I can’t help but draw some parallels and wonder how much further we can continue to move. I have spent some time studying the volume profile of the daily chart and I am still holding out for a better price to buy.

At the moment we are in a short-term bearish trend channel (I have used a regression channel on the 5 minute chart to highlight it) as we continue to forge lower lows and lower highs. We have support between 11550-11530 from yesterday and first thing this morning. To continue the short-term downtrend we need to take out 11530. I think a strong break below that zone can open up a move to 11450 and find the price I am interested in, but I am watching for a fake break.

The problem I have found over recent sessions is that price action has not prepared to close the low volume pocket (that was opened when we broke up to 11640) which any real momentum so I have been getting caught out with false breaks.

On the daily chart, we are Bullish above 11375 and break below that opens up a move to the 11150-11200 zone. The Dax is still lagging behind some of the other major equity indices regarding all time highs so you could easily argue that there is plenty of room to move into above current levels, despite being overbought. The point of control on my daily chart is around 10750 which was the major resistance that was broke towards the end of last year.

On the H1 chart, I have mapped out the 11630-11680 zone as a potential rejection area and 11450 as support with 11175 marked as the next level lower down if that is broken. Buyers are likely adding to positions from those levels.

On the m5 chart we gapped lower to the daily S1, recovered the losses by 10am GMT and have since found some support at 11550 and we now (at the time of writing) have an interesting candle pattern setting up which suggests a bullish move. Let’s see how that one plays out. We seem to have bounced off the 50-hour EMA and the median line of the regression channel.