Dax Technical Analysis 20/06/2016

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Good morning traders!

Welcome to the week of uncertainty, this week is going to make and almost certainly break many traders who attempt to trade the volatility. The EU referendum campaign is taking its toll on voters in the UK, with polls swinging around and opinions being challenged on every item on the political agenda. There have been mistakes and moments of brilliance on both sides of the argument, but I am suspecting that the Bremain camp will begin to pull ahead this week. Now it all comes down to Thursday.

It’s pretty historic event on Thursday. David Cameron’s quote of “this is a referendum and not a neverendum” means this is it, and leave or remain, it’s really the final decision. I am not going to debate the arguments again, there are plenty of column inches doing a much better job of that than I could.

Markets are going to be very sensitive this week to any polls, news, etc relating to the referendum, but many opinion poll providers have said they will not be releasing any. I can not imagine the media are going to go dark, so be prepared for some wild swings. A conservative investor would go on holiday this week, with no open trades, wait for the dust to settle and trade from next week. But I suspect many people reading this article and others will not heed that advice, because it’s one of the biggest events of the year, of the decade, of the millennium even and the rewards could be ridiculous. I am not going on holiday, but I will be trying to avoid getting caught up in the hysteria.

Dax Technical Analysis

On the daily chart we are still underneath the 200 EMA, underneath the kumo cloud and underneath the 50% Fibonacci retracement from the wider swing of Dec/Feb. We have created a solid-looking double bottom around 9500 and bounced significantly from there over the past week, making us short-term bullish.

On the 4-hour chart we have just tagged the 100 period EMA and reached some fairly key resistance at 9900, we have pierced the price envelope to the upside and many traders will be looking to line up a short from current levels.

On the 30-minute chart, we have already taken out the weekly R1 and the oscillators are overbought and as we have approximately retraced around 50% of the smaller sweet, traders may be looking at this as a potential sell signal.

One the 5-minute chart we have already crashed through the resistance levels of today, so we have to decide whether to trade a potential gap fill or decide whether this break out move has some legs and follow it.

I think the technicals are going to be skewed heavily this week, and the Dax doesn’t always act in the most predictable way at the best of times, so we must try to avoid getting ourselves into tricky spots during the periods of volatility.