Market Overview: DAX 40 Futures
DAX 40 bear reversal at the moving average. It’s a tight bull channel with 4 consecutive bull bars so it’s not a high probability sell below, but bears have been selling the moving average and making money. We are also at a measured move target on the weekly, although short of two targets on the daily so we might get another leg up before reversing.
DAX 40 Futures
The Weekly DAX chart
- The DAX 40 futures on the weekly chart was a big bear bar closing near its low so we might gap down on Monday.
- It’s a bear reversal at the moving average, but it didn’t go below a prior bar so it’s not yet as bearish as it could be.
- For the bulls, it’s a 7-bar bull micro channel – a channel without a pullback. So it’s also a spike and could lead to a channel up.
- The bulls see a double bottom with March and April, and want a breakout above the May high for a measured-move back up to January.
- The bears see a broad bear channel and we’re selling off each time we touch the 20-week moving average (MA), so they expected to sell here last week.
- Next week, if we trade below this week, would be a Low 1 sell signal in a bear trend and at the moving average. Although it’s a tight bull channel, so a higher probability short would be a Low 2 at the moving average.
- For the bulls, it’s a pullback and they will look to buy below at the Low 1 for a second leg up. We just touched one of the measured move targets so we might pull back here.
- There is another measured move target above, which would be reasonable, allowing the second leg after such a strong bull move.
- We’re in a trading range so there are reasonable cases for buying and selling and generally if traders look to scale in and trade small, they can use trade management to make money.
- It’s a decent sell signal for the bears and we might trade below next week. If the bears can get a follow-through bar – consecutive big bear bars closing on their lows, then it would be back to always in short.
- If the bulls can buy below and get a High 1 or outside up bar, then that increases the chance of going up to the top of the March range.
The Daily DAX chart
- The DAX 40 futures on the daily chart was a bear bar closing on its low so we might gap down on Monday.
- For the bulls, it’s a two-legged pullback in a small pullback bull trend. Bulls will look to buy a High 1 or High 2 near the moving average.
- For the bears, it’s a failed breakout above a wedge top. They are expecting two legs sideways to down.
- If you’re confused, you are probably in a trading range. We are right in the middle of the past 6 months of trading so the probability is 50% at best.
- The bulls hit a measured move target on the weekly chart but missed both measured move targets on the daily chart. We might need to get back there before traders decide to move down.
- Although it’s a bear reversal, the bear bars are neither consecutive nor big, so it is not as bearish as they could be.
- The bears want a follow-through bar and a good close on Tuesday, for a chance at a stronger leg down.
- Bulls want a reversal bar around the moving average to make the bears give up and look to get to their targets above. There is a chance both sides will be disappointed.
- Bears could get a surprise bar with no follow-through, forcing them to sell too low. Bulls might get consecutive bull dojis, making it tough to buy. Expect sideways next week.
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