Dax Technical Analysis 18/07/2016

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Good morning traders!

Britain continues to dominate the economic headlines with Theresa May’s appointment and BoE unexpectedly holding rates last week. The attacks in France had a bit of an impact on the European stock markets, but overall the Dax was up around +430 points. But right now the attempted coup in Turkey has been worrying investors, so further uncertainty comes back.

The market has been choppy this morning offering a gap-open higher peaking at around 10160 and then giving all the gains back and closing the gap, bottoming out at around 10045. I personally was a victim of the whipsaw, going long earlier today and getting stopped out pretty quickly.

We are struggling to make much progress above the daily 200 EMA and it is providing some strong resistance overhead, each time we break it, we are rejected. The three more significant attempts from earlier in the year and created further trend-line resistance, so if the rally continues, then I suspect 10250 could have some stopping power.

The 4-hour candle is beginning to look threatening to bulls, with a big wick piercing to a new recent high, but with bearish divergence appearing between price action and the oscillator. We are bullish above 9980 on the hourly chart, with the trend still intact.

In terms of price action today, we gapped up to the daily R1 on the pivot point indicator, paused for breath, broke through this and rallied up to the R2 before crashing back down to the daily pivot. Right now, price is deciding its next move. MACD is beginning to lose the bearish momentum on the 5 minute chart, so it’s possibly that the pivot may hold. However a break below the daily pivot can open up a move down to 10000 and test this level again.