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Good morning traders!
Yesterday we saw a continuation of Friday’s sell-off in what now appears to be the start of the much-needed correction from the all time high. I am in a strange position at the moment, I have been (and still am) bullish on the Dax, but based on the need for a healthy correction here I am happy to park the bullish sentiment and capitalize on the temporary bearish moves. I would personally welcome 10200, but I suspect there will be plenty of support to break to get there. Today I would like to see much of the same again. I am currently holding two small short positions on this account.
Bullish play today: play the bounce off either 10600 or S1 and target the daily pivot
Bearish play today: short from current levels or find a better entry from 10675
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Support & Resistance
| KEY LEVELS | |
| Daily R2 | 10854 |
| Daily R1 | 10753 |
| 34 Hour EMA | 10735 |
| Value High | 10679 |
| Daily Pivot | 10678 |
| 24hr VWAP | 10670 |
| Naked VPOC | 10663 |
| Value Low | 10630 |
| Daily S1 | 10577 |
| Daily S2 | 10502 |
| 200 Day EMA | 9684 |
Dax Daily Chart Analysis
RSI has dropped below 60 for the first time since mid-January, currently around 57. back in mid January, price was just about to break 10k. The bearish divergence we saw from the article yesterday certainly seems to be a valid reason for the correction behaviour at the moment.
Dax Daily Chart
Dax Intra-day Chart Analysis
We took out S2 fairly early yesterday which was the main highlight and gradually tumbled lower in stages after. 10615 was a key level of support and it was tested twice before being pierced at the third attempt late last night. The EMA is pointing a little a little further down and price plummeted to hit the lower Bollinger band and has now bounced back towards the mean, leaving a gap below for a further fall. 10600 will likely be stubborn.
Dax Intra-day Chart (30 minute)
Dax Volume Profile Analysis
Yesterday produced a bottom heavy distribution, with a pullback towards VWAP at the end of the day. You could draw a trend line sloping downwards across the peaks of the day and this could perhaps be resistance. If we open higher today, then I would like to see either the value area high (YVAH) or the VWAP for yesterday (thicker black line) act as a level to bounce lower from.
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Looking at around the low 107xx level, there is a worrying low volume pocket, meaning if we take out 10700, we can easily move towards the mid 107xx, this will stop my trade out, so I am hoping there is plenty of resistance.
Dax Volume Profile Chart (5 minute)
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