Good morning traders. With a break above 12,812, the German DAX index has continued its consecutive series of higher highs and higher lows. This means that the bullish trend is still in play. Let’s look at why 12,750 and 12,650 are important.
The trend-defining level is currently 12,600 (most recent, low, blue swing marker), this means as long as the price remains above that 12,600, the market is bullish. If price was to re-trace from current levels, then the most obvious question should be “where was the market previously happy to do business?” In order to find that, you should look at a composite volume profile from the last couple of weeks, see the chart below.
Why 12750 and 12650 are important
Notice the composite volume profile on the right-hand side. When looking at a volume profile, identify the higher volume areas as a ‘high probability price zone’ for the market to return to.
Can you see how over the last week, both 12 750 and 12 650 sit within the high volume areas? When price finishing its bullish impulse activity and momentum, it enters its reaction phase and retrace. In these cases the price will often revisit the high-volume zones because it was an area of balanced and fair value between buyers and sellers. The market was happy to do business there and often returns.
I asked the question yesterday will the Dax return to the point of control and the answer was yes. But not only did it return to the point of control it also closed above the previous day’s high after a significant range extension. That’s a bullish sign on its own. Said this morning during the overnight session receive price break above yesterday is high and reach as high as the Camarilla pivot at just under 12 900.
DAX Market Profile
Yesterday’s initial balance formed underneath the previous day’s value area, but the bullish range extension cleared the point of control, the value area high and the distribution high with the price also closing above all three at the end of the session. That’s a bullish signal.
DAX Key Levels
We’re already way up above these intra-day levels, so perhaps they may not feature today. If not, mark them on the chart for another day.
| Method | Price |
| VWAP | 12756 |
| Point of Control | 12752 |
| Value Area High | 12796 |
| Value Area Low | 12740 |
| Pivot | 12756 |
| R2 | 12924 |
| S2 | 12587 |
