Dax Technical Analysis 18/05/2016

Hello traders!

We saw a decent gap higher yesterday when the market opened after the long weekend and this tempted quite a few buyers to go long, including myself. We then rolled over and eventually closed out lower completing a pretty bearish looking candle. We are now gaining momentum to the downside and 9750 is under threat. When this goes, I am going to be interested in a short position.

It’s fairly clear that we are still trapped in a range, so a range trading strategy for neutral traders may prove the most effective, the range is between 9750 – 10100.

Bears – We are still under the 200 EMA on the daily chart and there is a recent fractal near the 9750 which adds to the significance of that level, when/if it breaks. We are coming up on the hourly 34 period EMA as well so there may be an opportunity to open a short position. It’s also difficult to argue against the break out from the bullish trend channel. The momentum has swung to the bears. Bears could be tempted to short somewhere between 9950 -10050 targeting a move back down to 9800 and lower.

Bulls – The 9750 level is strong support and the oscillators on the hourly chart are providing buying signals. The 5 minute chart still has a bullish channel intact, so intraday, there could be a small buying opportunity. Bulls could be tempted to buy around the 9750-9850 zone, targeting a move towards 10000.

I am thinking there is more opportunity to the downside, given the break from the daily trend channel. There is a shorting opportunity if we break out of the 5 minute trend channel, to the downside.