Dax Technical Analysis 19/04/2016

Good morning traders!

• Big close last night and strong bullish momentum
• No major resistance until the 10350-10400 zone
• Strong Zew ratings helped the momentum continue
• Dip buying strategy on the RSI
• New trend defining level 9880
• Potential pullback zone 10100-10150

Congratulations to all those who took the longs, we mentioned yesterday that a close above 10120 would be massively bullish but I didn’t expect to reach 10350 this quickly. It was generally accepted (among analysts and traders) that the Dax was undervalued by between 8-15% so this rally has certainly helped close that gap.

At the time of writing we have just given the first sign of a slowdown and my 30 minute RSI (8 periods) is 93! Would I short? No. But I would wait for a pullback in order to go long.

10120 is interesting to watch because we tend to find breakouts retrace somewhere close to the original resistance level before waving it goodbye and continuing in the original direction of the break. This would allow me to open a trade to target a move back towards 10400+. In the short term I like a pullback towards 10275, a former mini sticking point action (on the micro timeframe) and this is the 38.2% retracement of the daily swing (which started just after 08:00 BST this morning). In the extreme short term, a scalper may be watching a reaction to 10325 to buy from there. My concern with this would be that traders may start unwinding a few positions, profit taking, and the momentum may temporarily reverse until it finds a lower/strong level of support.

Am I trading right now? No! 🙁 I have no position open and I am gutted about that. I couldn’t open a position late last night and didn’t react quickly enough this morning. So although it’s disappointing to miss an opportunity, I am confident that there will be plenty more.

Like a fellow trader recently said:

It’s better to regret missing a good trade, than to regret still being in a bad one

Dax Support & Resistance