Dax Technical Analysis 27/01/2016

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Good morning traders!

Did anybody catch the rally yesterday? One strategy that certainly would have caught that rally was the S2 bounce aiming for a return to the daily pivot. At around 8am we had reached the daily lows, just short of the S2 and the 5 minute candles began to show some tails suggesting a bounce. A trade from there to target the daily pivot (which often fails), would have returned a reward to risk ratio of nearly 5:1!! The actual trade moved nearer to 300 points, meaning it would have return 10:1 to anyone who got it, but with that strategy, I generally only aim for the daily pivot.

Entry @ 9580

Stop under the S2 @ 9550

Profit @ 9727

Right now the Dax is a little choppy and there is no clear direction so at times like this, unless a clear range can be traded, I would personally just avoid it. I am waiting for a trend to resume on the EURUSD.

Things to watch today, besides the pivot levels:

Retracement zone from the swing yesterday providing a possible bullish reaction (m5 chart)
A break below the daily S1 can take us down to test the low of yesterday (m5 chart)
A break above the high of yesterday can take us to test the head and shoulders neck line (m30 chart)
- Or complete a 100% extension of the recent move from the lows 10163 (H4 chart)
Finally a test of the underside of the long standing pitch fork (Daily chart)