Dax Technical Analysis 06/01/2017

Good morning traders!

It’s that time of the month again, NFP is due out and gamblers everywhere are getting excited about the opportunity to scalp a few points when the numbers are released. I personally tend not to care too much about NFP, it’s over-hyped because, in my opinion, it’s generally a tool for rate hike speculation, but the Fed have just increased rates are pretty hawkish already, so I don’t really see the need to get too excited about it. There has been talk about how a rise in interest rates will start the collapse of the US housing market because of the impact on mortgage rates, so a huge NFP miss could be interesting, but is that impact likely to happen in the space of two months? I doubt it.

I believe many analysts are currently looking at USD strength, so an opportunity to by the USD exists, whether that’s before or after NFP is up to you.

The Dax has slowly continued its mini bearish trend but seems to be slowing down and moving sideways, price action is making a bull flag and technically this is a buying signal. 11550 is becoming an important support level on the lower time frames, and there is plenty of demand in the 11530-11550 zone, at the moment. If that’s demand disappears then it could open up the door to 11500 and perhaps 11450, and there will likely be a lot more demand here.

If the 11550 level holds then it could confirm that support is strong and a base has been built offering a buying opportunity to target a break higher from the current range. Finding a good entry with a decent stop loss is challenging in ranges, because from my experience there tends to be a stop loss sweep first, so perhaps a limit order could be an option unless you have a decent reward: risk setup.

On the daily chart, nothing new, we are bullish but slowly retracing and coming off the recent highs. Pullbacks allow bulls to buy dips. 11450 has the most demand in the short-term, with 11550 now becoming stronger. A break above 11675 opens the door to 11800+ and there is still a disparity between Dax and other European and US indices.

On the H1 chart I have marked the two demand zones, if buyers go long at 11550 and it fails, then there is another opportunity at lower levels. The 11630-11680 zone is fairly strong resistance, so it will be interesting to see how many attempts it will take to break it.

On the m5 chart we are currently seeing price attempt to break 11550, as it has done 6/7 times over the last few days. I have drawn a regression channel over price and we are currently contained within the top half despite having broken below both daily pivot and the 50 EMA from the H1 chart.

The daily S1 is interesting for bulls (pivot point indicator)

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