Dax Technical Analysis 23/08/2017

Dax Outlook

The market is currently rotating between the major levels of 11943 and 12335

Long term bearish below 12335 and short term bullish above 12105.

There is a large low volume area directly below current price action (12220 at time of writing) which would support the idea of a pullback. This low volume area was left behind with the rally from yesterday.

Current bias: happy to be flexible and range trade.

IDEA 1

Overhead resistance is a trend line from the highs of 8/8 through the highs of 16/8. This is visible on the 240m chart (centre bottom). If profits are taken here and price respects this resistance, then we could expect a pullback. If we look towards the bottom of that chart and pull a line through the lows, then we can see the rising support.

This combination of lines creates the beginning of a triangle. In these types of triangles, the best strategy is to trade them as a range. Sell at the top and buy at the bottom. Don’t trade in the middle! If this resistance is not respected, then we can reasonably scrap that idea.

I have posted another idea in the Journal.

The News

US President Trump says he is willing to shut down the government to build the wall and is likely to scrap NAFTA at some stage. Looking ahead, highlights include Eurozone and US PMIs, DoEs, ECB’s Draghi and Fed’s Kaplan

Britain is set to soften its stance today on new laws, requesting to only end ‘direct jurisdiction’ of the ECJ after Brexit. In the paper set to be released today, it will show an acceptance that EU judge or officials could play a role in settling disputes.

Commodities were range-bound overnight with gold prices flat amid similar price action in USD after US President Trump’s comments in Phoenix. WTI crude futures were marginally lower following the API release which showed crude inventories at a drawdown that was in-line with expectations, although gasoline and distillate inventories showed builds.

Federal Reserve discount rate meeting minutes reveal that Federal Reserve banks unanimously voted to leave the discount rate unchanged at 1.75% at its most recent meeting.

US President Trump said that employee wages will now increase and that if we have to shut down the government, we will build the wall. Trump said he respects the fact that Kim Jong Un is starting to respect the US and that maybe something positive can come about, while added that he personally doesn’t think a deal can be made on NAFTA and will probably terminate it at some point.