Dax Technical Analysis 27/12/2016

Good morning traders!

As expected, volume was very low yesterday and although we did make subtle progress, but there was not a lot to report on. We are still technically in the same position as the article from yesterday: we are overbought and awaiting a pullback/correction.

So once again, the article may not have have the usual content because there is not much to really discuss at the moment, the market is quiet.

Dax Bears

If we took a short from current levels, and we were able to risk 50 points on trade that may stay open for a few days, I would expect a signal to look like this:

SELLLIMIT DAX @ 11475 | SL: 11525 | TP1: 11410 | TP2: 11340 | TP3: 11240

T1 would be just above the low from the 23rd
T2 would be the balance point from the 15th
T3 would be the pivot point from the 14th which was resistance on the 9th and support on the 14th

Dax Bulls

If we took a long position from current levels, we would have a potentially terrible price. We are overbought, the oscillators are overbought, we are at the top of out trend channel, we are at major resistance and volume has dropped away. This isn’t favouring a long despite the fundamental picture and the big picture outlook considering the macro-economic factors, supporting a bullish bias. I would love to be long on this market right now, but I am happy to be patient.

If I was to take a long, then a signal may look something like:

BUYLIMIT DAX @ 11415 | SL: 11395 | TP1: 11455 | TP2: 11480 | TP3: 11510

T1 is the daily pivot and provides a 2:1 reward setup
T2 is the recent high
T3 is just under the daily R2

Dax Range

Another option is the breakout trade. After the recent swing, we have been digesting and consolidating, so draw a line around price over the last 3/4 sessions, perhaps widen that range by 15-20 points to allow a fake move to reveal itself and trade a breakout.