Dax Technical Analysis 07/08/2017

Dax Outlook

After Friday, we are short term bullish after making a higher high and higher low. In the chart here you can see the trend. It may be weak but it’s evident. The current short-term trend defining level is the 12085 low (futures). The current high is around 12320 and a break above that will continue the strength of the trend. I am writing this article before the market opens and there is immediate resistance above current levels. The resistance comes in many forms. We have the falling trend line resistance, we have previous highs and we have another low volume node, marked out by the blue horizontal area. with a previous high around 340

I am writing this article before the market opens and there is immediate resistance above current levels. The resistance comes in many forms. We have the falling trend line resistance, we have previous highs and we have another low volume node, marked out by the blue horizontal area. with a previous high around 340

We have a few support levels too in the form of the lower falling trend line, horizontal zones of previous value areas and the 150 POC (composite of the last week).

We are expecting a pullback towards the switchback zone, but looking for opportunities to go long, until the technical trend breaks.

Bullish Strategy

“Buy just above support, take profits just below resistance”

The short-term technical trend is favouring long positions and the key for buyers is to see the price holding the pullbacks. So a good strategy is to buy the pullbacks. Look for bullish divergence between price and an oscillator. Look for seller failure and double bottoms around support. We are stretched after a strong Friday, so it’s not unlikely that we see a pullback, so buy the dip. Alternatively, if we break above the highs from Friday and the strength continues, then the measured move is the target: 12445.

The biggest risk for a buyer is a fake move higher from an LVN rejection. Directly above the weekly high between 337-379 is a low volume node (LVN), so there is potential, (not a guarantee) that this LVN rejects price, sending price lower, creating a trap for those who bought the break above the weekly high.

Our favourite spots to buy are 12150 and possibly 12215 – both of which assume a pullback.

Bearish Strategy

“Sell just below resistance, take profits just above support”

The longer-term technical trend is still bearish and the trend defining level is around 12680, so sellers are bearish below that level and looking to ‘sell the rally’. So current price action is very interesting for sellers, because we have tagged multiple levels of resistance. The stretched move from Friday plays into the hands of sellers, so a pullback opportunity is there right now. Whether or not a full reversal trade is available, which will take on the 12085 low, remains to be seen.

Our favourite spots are to short from 12300 assuming the overhead falling trend line holds or 12335 assuming the LVN rejects price.