Big bull day yesterday, lots of news, lots of volatility and volume and generally after a big day we have tended to see a pull-back or at least a period of consolidation before the resumption of the overall trend. We have now seen two decent bull days in a row, and based on the trend over the last few weeks, I think we can expect to see a couple of slower days, Friday also tends to be a day for reversals. That would normally be my expectation/prediction, but today happens to be NFP day and anything can happen on NFP day. It’s kind of a make or break moment for the latest US monetary policy decision, if they print a massive figure (which I predict they will) then all is good, markets rally again and wake up on Monday with a hangover. If they print bad or on target then I go with my first prediction about a correction.
If the figure is horrendous (which I doubt) then there is a problem.
Daily Dax Technicals
I have spotted a slightly worrying sign that the steepness of the current bull trend is unsustainable, we have covered over 1000 points in just over three weeks and that is pretty unheard of without a correction. So you could argue that when price was heavily rejected from the 8300 level on the 16th, with an astronomical high volume day, we are still just feeling the follow-through now as new investors flood the market as the public participation phase sets in, cue the bubble theory.
So I would personally like to see a healthy correction for a couple of days fairly soon, to at least break the trend up a little. Take it off the boil for a moment because no-one likes it burnt out. It will continue upwards, but build again from a better lower level.
Hourly Dax Technicals
Here no-one can deny we are showing the basics of an up trend, higher highs and higher lows.
Based on what I said earlier, I would like to see a correction down closer towards the most recent low; 9150-9170 zone before I enter another long position. I will spend the day watching tomorrow to see how the market reacts, but I would imagin I would enter around the 9250 area targeting 9500.
Some interesting news to come up tomorrow, I have no open positions on the Dax and after an excellent week I am reluctant to chase something and would prefer the market comes to me.
Geo-political risk pulls market lower in this mornings trading with Ukraine government reporting that a column of 32 tanks has entered the country from Russia.
There is also divergence between the Eurostox and the Dax suggesting that one of them will need to catch up to the other one putting further downside pressure on the Dax.
The market is currently overbought in the short-term so I would personally welcome a small correction before a resumption of the downtrend, as I mentioned earlier.
Naked vpoc is 9288 and if we get there, we could extend lower towards yesterdays value area low of 9274 from there we target the deviation low, but it's unlikely we drop as far as that before 14:30GMT when NFP is released. I am long from 9250.
Following on from my summary on Friday, I am still of the belief that we are going to see further bullish action on the Dax today. I am aware of the technical argument for being bearish, but I think the bull case is stronger right now. Let’s see how the day progresses. The DAX top-30 index looked set to open 0.1 percent lower on Monday, according to premarket data from brokerage Lang & Schwarz at 0724 GMT
Dax Fundamental Analysis
Geo-political tensions are still present with the conflict between Russia and the West, regarding Ukraine. This is ongoing.
China release poor data suggesting a slow-down in the world’s second largest economy, increasing the expectation for them to commence easing.
Indicated 0.8 percent higher. Pimco has created a 225 million-euro ($279.75 mln) award program to retain top talent after the surprise departure of co-founder and Chief Investment Officer Bill Gross, Allianz SE said on Friday.
Indicated 0.1 percent higher. Co-head of corporate banking and securities, and head of corporate finance, Robert Rankin is set to join Australia-based investment holding company Consolidated Press Holdings Ltd as chief executive in January 2015.
Indicated 0.6 percent lower. Siemens has agreed to keep its healthcare unit as a “part of its long-term, strategic core portfolio” and must strive for majority ownership even if the unit is listed on the stock market, according to trade union IG Metall.
Indicated 0.2 percent higher. Volkswagen’s Italian supercar maker Lamborghini has more than 3,000 orders for its Huracan model, more than for any other model until now, Lamborghini CEO Stephan Winkelmann told Handelsblatt. He said revenues this year would rise more than 20 percent, as would the number of cars delivered.
Dax Technical Analysis
The weekly chart shows a spinning top suggesting consolidation and indecision in the market. Price stalled around the mid 94xx level but would not significantly breach 9150. Monday could be important to decide which direction we continue this week. Are we going to experience another pullback to add to Friday contributing to a further correction, or are we going to continue to the trend.
The daily chart shows we are still under the 200 EMA and the 61.8 (taken from the closes of the swing) so there is once again that overhead resistance we saw last week. Friday was an unsually large volume day, the last time we saw volume similar to that was the 16th which led to a reversal. I am not suggesting that this is happening again, but based on the need for a correction and the key levels of resistance above, I wouldn’t be surprised if it did. Then again, my mind keeps returning to the overall big picture: low oil prices, lots of reporting data to boost dax-related company stocks, year-end ‘santa-rally’ and free money flowing through from Japan and other easing economies.
Original Article: German DAX & Forex Trading Portal » Dax Market Outlook 10/11/2014
We are ranging today, although the volume profile is giving us a strong P
Price is trading on the vwap and has yet to break below the naked vpoc. If this is just a period of consolidation then I will take that, but I am starting to fear that perhaps this could be the start of something else.
My trade is still active and I am going to keep it there for now.
Early earnings data has boosted the markets in the Dax today with Henkel contributing with a near 4.5% uplift. Releases like these can ensure that equity markets remain buoyant heading towards the end of the year. We are trading at the top end of the key levels today and are above the 200 day EMA. The next target for me is the daily R2, I don’t know if we can trade much further than that.
There was a pocket which developed under YVAH and we sliced straight through that today, so it will be interesting to see if we can hold above that level. Further down there is another low volume area, if we do drop towards that, then again I will be watching it closely.
We had a gap open today, much smaller volume than normal for reasons we know, we closed the gap and formed a doji. Other major markets are looking a little 'toppy' and because of this (and that I couldn't take half of my trade off the table) I have closed my trade today.
There are some interesting articles to look at and a trade setup on the SPX to look at as well as general analysis based on volume profile and fundamentals.
Take a look at the video (sorry if the volume is low)
There was a heavy sell off first thing on the Dax, as there was no major news stories (that I could see), I suspect the reasons are due to profit taking.
There is a bit of pressure on the Dax at the moment, as it is struggling to breach the 9450 level and a wedge pattern is forming which threatens a break to the downside. Other major markets like the SPX and the USDJPY seem to be experiencing a top leading to a pullback, the Dax may follow suit. The SPX has already breached a similar wedge pattern.
We have already past the daily R2 for the day but the pivots are unusually compressed due to the low volume and low movement day yesterday. The Camarilla pivots are indicating a massive breakout to the downside and signalling a sell opportunity (on a pullback).
Further sideways movement. I am not trading at the moment, I am watching. I am waiting for a break up/break down move before deciding what I am doing.
Bearish day today and there are a number of reasons for us to see the start of a large correction over the next week or so. I am still looking for confirmation but this is what the technicals seem to be spelling out.
We broke the wedge formation, pierced 9200 and have a large bearish candle which has engulfed the last couple of days. Today’s close is significant if it is below 9200. We could be heading down towards 9000 in the short-term and building again from there to get back into the 9600+ region by December.
In early trading we gapped up higher and immediately pulled back to close the gap and swung around in choppy conditions. I entered into a scalp trade as the gap was closing and was stopped out almost immediately. One of those things.
My original short-term prediction from yesterday was that we were going to have a larger correction to the recent price action, but perhaps I might be swaying towards consolidation instead and look to trade a break up or break down.
I noticed on the H4 chart that we had a gap late October and based on subsequent price action you could argue that the gap could be a balance point. If that gap was the 50% point of the bull run, then you could expect a top to be around 9500. I’d be interested to see whether that holds true.
I have noticed that we have moved back inside the wedge pattern so a recovery from yesterday, but there is lots of resistance to clear to resume the upside move, so I am still going to wait and see. Long from 9200 yesterday would have been a good opportunity, but hindsight is 20/20.
Another day of consolidation and definitely range bound currently, perhaps steering more towards the bearish argument at the moment, but reluctant to commit until I see a breakout or an interesting candle/volume. The trade setup I suggested the other day regarding pulling back to the broken wedge/trendline support is now invalid, that opportunity has gone, but I couldn't capitalise on it. Congratulations to those who did.
Original article: www.daxtrader.co.uk/dax-daily-market-summary-14112014
Outlook video: https://www.youtube.com/watch?v=pgkuQiq44UQ&feature=youtu.be
Today we are trapped in a fairly tight range and I am still waiting for a break out before trading. The range is now tighter than over the last couple of days and seems to be compressing and coiling. The daily chart and recent stalling in*price action suggests plenty of supply and perhaps a break to the downside, but I will wait to see which way it wants to move. If we break above the 9300 level I will consider a long and if we break below the 9100 level I will consider going short.
On this chart (drawn last night) I have drawn the vpoc, value area high and value area low for the last two days and it just so happens that these levels define the range we are currently trapped in. I also notice that we are coiled around four major levels: the developing vpoc of today, the naked vpoc from yesterday, the current 24-hour vwap and the daily pivot!
Heavy consolidation, spinning top yesterday, small range today, we are building for something.
I am currently short the SPX, EURUSD and AUDUSD. I had a short on USDJPY stopped out last night.
So not a great deal to report from Friday afternoon, the market is pretty much back to where it was. The range is closing in even further now and I suspect we could remain in this box for a few more days. There are a few interesting setups emerging on the charts. Two triangle formations are forming and there is a head and shoulders pattern as well.
Mornings could produce the interesting moves next week so I should get myself ready for some intra-day early trend following trades, but for the longer swing trades, I am watching for a significant break of the outside triangle pattern formation.
Next week outlook (if pushed): Ranging early on, potentially breaking out towards end of week.