Dax Technical Analysis 09/12/2016

Good morning traders!

We all know that the decks has had a fantastic run this week, and has broken through 11,000 for the first time this year. The rally has been so steep that it seems unlikely that I will continue in this way without a small digestion. This doesn’t necessarily mean the price will reverse, just that it needs to take some sort of breather.

The cyclical or seasonal environment is friendly for the decks normally until the end of the year, so the bullish phase is not finished yet. The next technically significant level is 11 430.

During the ECB meeting yesterday, Mario Draghi announced the extension of the borrowing program by nine months but will lower the monthly volume from April 2017, this will continue to drive the bullish sentiment as money continues to be printed.

Friday does tend to provide corrections and reversals, so bears will be holding out for a corrective move today, which is arguably well overdue.

Dax Technical Analysis

The daily chart has gone vertical over the last week and the weekly candle looks incredibly strong. We are showing no signs of slowing down yet as there still seems to be strong supply, despite the overbought conditions. I am waiting for a dip.

On the H4 chart, the story is the same as yesterday; we are at the top of the Bollinger band, the oscillator is overbought, it needs a pullback.

On the H1 chart, there is bearish divergence, but you can get burnt on these signals when the market is trending so strongly. So, for now, I will ignore selling signals and wait for a dip.

On the m5 chart, a break below 11160 could open up the 110125 zone again, this was supportive yesterday, but if that goes there is a low volume pocket below and the price could find a decent opportunity to correct. I would like to see 11000, maybe even 10900. If price holds and doesn’t break lower, then the next move is a break above 10230 on the way towards 10430.