Dax Technical Analysis 19/05/2016

Hello traders!

A bullish day yesterday ended the run of four straight down days and gave the range traders a decent return for going long at the bottom. We started out the day yesterday with a fake break to the downside which drew in many traders, including myself, but the move hit around 9825 and bounced to 996x. CPI printed as expected and there was an ECB meeting yesterday as well (although not about monetary policy). The big news from yesterday came from the FOMC minutes, as usual, traders began to pick apart the language in the minutes and concluded that whilst most members are divided, the overall bias is dovish.

Today we have an ECB report coming out, which could provide a spark, but no other major high impact news. We started the day off poorly today and pretty much engulfed all of the gains from yesterday, which looks heavily bearish. But we are now down at support and as we are in a range, what do people do at support, in a range?

I am watching 9850 as a key level intra-day because it seems to be the neckline of an small inverse head and shoulders pattern and has been a sticking point previously. If we break that, perhaps we could see some further movement to the upside. As I type this, we are actually beginning that test, at 9844.

We have already taken out the daily S1 today and are now past that heading back up towards the daily pivot. But this move could possibly just be a retracement from the wider trend as the daily chart still looks bearish and once 9750 goes, it will almost certainly encourage more bears to join in.

The Dax is difficult to trade right now and it’s time like this that brokers earn their money, because traders will be overtrading going long, going short, getting chopped up everywhere and the brokers just skim those commissions and grind a trader down. Sometimes it’s best to sit out and wait, although it’s boring to do that, it’s more prudent than forcing a trade that is not there.

Dax Support & Resistance