Dax Technical Analysis 17/02/2017

Good morning traders!

Carsten Kengeter (Deutsche Börse chief) is confident that the merger with the London Stock Exchange will go ahead, despite him being investigated for insider trading. The Dax’s baby brother the SDAX reached five figures for the first time this week, another sign that perhaps the Dax is lagging behind because the MDAX already reached all-time highs earlier this year. I was also reading articles about the growing demand for German companies by private equity companies. There is a lot of expectation that mergers and acquisitions will pick up massively this year, so I wonder what impact this may have.

Gold is bullish and the momentum seems pretty strong, perhaps the demand comes from a combination of geopolitical issues and a falling confidence in Donald Trump who seems to be struggling at the moment with reshaping his team and relentlessly whining about the media. The S&P500 is stretched long and looks to be at risk of rolling over. The question is are we risk on or risk off?

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My DaxTrader trading algorithm is currently neutral.

Dax Daily Chart

The market seems a bit delicate at the moment and I suspect that many traders are getting frustrated with it. Right now, the doji from the other day and the proceeding couple of bearish days suggest that this is the start of a bearish wave, but candlestick patterns don’t always tell the full story. The trend defining level still remains at around 11400, we are bullish above that.

01 Dax Daily Chart

Dax Hourly Chart

We are testing the 11710 level right now and I am looking for a reaction here as the level has been both support and resistance in the past. If the level holds and we get a bounce, it opens up a nice opportunity to go long to target a move towards 11850+ again. If it breaks significantly then it opens up 11600 and 11550 again. Alternatively, covering all bases, we get stuck in yet another range between 11710 – 11875.