Dax Technical Analysis 10/01/2017

Hello traders!

Despite some negative guidelines from the Far East, regarding China’s inflation and PPI which may have affected trading conditions yesterday, the Dax shot out of the blocks early in the session this morning, reaching 11600 once more. It turned out that the rally was to be short lived as it was slapped back down to 11550 almost as quickly as it rose.

I believe that many traders today are expecting to see the 114xx levels and I have to say it’s about time. But as more traders jump in and go short, the higher the likelihood that price will continue to rally, which I know sounds a bit backwards, but it’s what tends to happen.

Yesterday, I personally had a mixed bag on the Dax, two trades, one winner one loser, they pretty much cancelled each other out. Treading water would be a good analogy to describe yesterday. I missed the very first move of the day, along with a few of my trading peers, for different reasons. We opened up with a gap but didn’t have any momentum to trouble the supply zone (11630-11680) and ran out of steam pretty quickly, we had a turnaround approximately 30 minutes into trading and the gap closed fairly quickly allowing traders the opportunity to ride a short. The wave was 100 points, but traders who only caught a fraction of that move would have been happy. From there, right up until the twilight stages of the session, we were trapped in a 30 point range (give or take).

Dax Technical Analysis

On the daily chart, we posted a bearish engulfing candle yesterday and this suggests further bearish movement. The pattern would have looked a lot more threatening to bulls if we have pierced a new high yesterday because the candle would have made a higher high, a lower low, had room to the left and possibly created a “Big Shadow” candle, which is a great ‘naked-trading’ technique. But it didn’t. Sorry to spoil it. Watch for a break under yesterday’s low.

On the H1 chart and the m15 chart, I have posted the supply and demand zones, they are being respected, basically meaning that we are in a range, again. On the m15 I am generating some signals based on various divergences (RSI, Stochastic and MACD). MACD levels set to 8 21 9.

The volume profile charts show little, the 5m volume profile chart shows an almost normal distribution curve, which makes sense considering we have been in a range. The 15m volume profile chart shows what we can see visually: there is a gap below us and if we break it we will have the opportunity to close it.

We are range bound at the moment and we have the inevitable slowdown in the build-up to inauguration day on the way as well. If I had to predict, which is never a good idea, I like the idea of a gap close before a rally through 11680.