Dax Technical Analysis 09/09/2016

Good morning traders!

The end of yet another week and perhaps a day of digestion after the ECB kept all rates unchanged yesterday, maintained its monthly QE purchases and still intends to end its purchases in March 2017. Although conceding that interest rates are likely to remain lower beyond the current asset purchase period. I think a lot of analysts were expecting this, as the wording [QE purchases] “are intended to run until the end of March 2017, or beyond, if necessary..” so leaving it open for extension is still there.

The relevant commitees have a full mandate to redesign QE, but at this stage it’s unclear if other assets will be brought in, although Draghi finally did admit to the German bond scarcity, nothing we didn’t know already. Now eyes turn to the October or December meeting, to see if they extend the program to July 2017 or even September 2017.

Not quite the catalyst that I expected (which I discussed yesterday) for us to break out of this range, so I have to presume that we’re back to business as usual.

So what have we got out there at the moment, in terms of opportunity?

BEARS

My RSI indicators are giving me selling signals from the daily chart (70 30 8 settings) and suggesting that we are winding up for a bearish market. At times like these, I like to see a double top, which we have, or bearish divergence, which you could argue we have as well, but it’s tenuous. So bears will be getting pretty excited about this opportunity. I am considering running my RSI Expert Advisor 4 (which is due out very soon) on a bearish template looking for selling opportunities, something like 60 20 14 with a trailing stop and trailing step, an ATR stop loss and an ATR profit target (haven’t decided the multiplier), using limit orders to trade a pullback of 0.5 ATR, and have it use my new ‘choppiness filter’ (to weed out the choppy market conditions and not trade during those). There are some great little features and upgrade on RSI 4, I think you guys will really like it.

BULLS

We’re pretty stretched right now so opportunities are fairly tricky to come by, but we are still technically in a bullish market with the up trend still intact. Although it’s being threatened, especially if the 10650 fails to hold today and these bearish signals start to materialise. I have been bullish for a while, looking for 10,800. We got pretty close to that, now I can’t see my next target, so have to admit that I may be changing bias soon. A break above 10800 will keep me bullish.

My renko system did well yesterday, there were a couple of decent fast trending moves that it caught, +105 points too, but unfortunately today we’ve been chopped up again, giving most of those points back. False alarm. So I will persevere with this system and give it the benefit of the doubt, for now.