Good morning traders!
It seems we have had a break out now to the upside. Price has recently made a mockery of the range that we have been trading for most of the month of November. After the Italian referendum we had threatened to break out lower below 10 500, but instead reversed to now reach current levels. I received some questions recently asking “why are we going so high?” and the answer is not so simple, but I believe it’s partly down to cyclical stock market behaviour and a catch up with the US stock markets. It’s approaching year end so companies are looking to get into overdrive to finish 2016, we have the Christmas season so spending increases, the Italian reaction was digested with relative ease in the markets so bulls were woken up and have clearly taken control of the market.
Dax Technical Analysis
Yesterday we had a daily close at 10 831 and this was outside of the large daily range, if only by one point, but it highlights significant continued the bullish momentum. This morning’s candle only strengthens that case. But as is often the case, after a large mood like this, we are now over boards and price is expensive, so new buyers are waiting for the pullback before attempting to take out the November 2015 high.
On the four-hour chart, we are at the top of the Bollinger band with the oscillator in overbought territory still a pullback from here is likely, The question are how much and when? Testing the previous resistance zone would be the most obvious so 10 750 could be interesting, alternatively 10 650. Yesterday I was looking at 10 570 being a potential balance point, but of course, price continues to rally without pulling back.
On the hour chart, you can clearly see the first break lower than cutting back through the range and breaking out higher. I just wonder how many sellers were caught and are still in their position on the first break lower. On the volume profile chart for the last month or so, I have the volume points of control at 10 675 this could be an interesting project level also.
The five-minute chart is quite funny because we have been in a short-term bull-trend since Monday and price have now broken out higher through the top of that bullish trend channel. We are now trading at the daily R1 and on this timeframe, the daily pivot is interesting as the area to pull back to.
I haven’t been able to capture much of this Dax move as I have been very patient and protecting my capital, so have been trading forex instead. GBP pairs have done very well, and here are a couple of examples of trades that I sent out yesterday to the Gold guys:
Dax Support & Resistance
|200 Day EMA||10381|