Market Overview: DAX 40 Futures
DAX futures went sideways with a bear inside bar, a possible final flag at a measured move target. Tight range on the monthly and 5 bear bars on the weekly, so tough to buy and might be near the bottom of the down leg. Sideways more likely. We are right in between 18000 and 19000 – closer to 18000 and we might need to test it again before we go higher.
DAX 40 Futures
The Monthly DAX chart
- The DAX 40 futures went sideways last month with a bear inside bar, a possible final flag at a measured move target.
- The bulls see a tight channel, likely 2 legs and now sideways for one more leg up.
- Although the bears have only managed to get below the low of a bar once in this tight channel, the small doji is likely the volatility contraction that ends the leg.
- It’s a weak sell signal bar, so there is a low probability sell below.
- Bulls are on the stop-entry buy above March, but they are likely disappointed that after three bars, it hasn’t gone very far.
- Open bull gaps are so difficult to sell, and the trade would require scaling in.
- Inside bars often have breakouts above and below. Breakouts of inside bars often come back within 5 bars.
- If no bulls want to buy above, what do they do?
- Always in bulls are still long, no signal to leave yet.
- If you see April as a pullback, they expect a MM up the size above 19000.
- The best long recently was the buy under March and exiting above March. Classic bull channel entries.
- There is a lot of distance to the MA. But can bulls pull their stop up below April? Some might. But there are likely buyers not too far below.
- Always in long, so it is better to be long or flat.
- Traders expect the first reversal to be minor.
- Expect sideways to up next month.
The Weekly DAX chart
- The DAX 40 futures went higher last week, triggering a High 2 at the moving average.
- The bulls see a bull channel with three legs up and a couple of legs sideways, so a High 2 is a reasonable buy setup.
- The bears see a sell climax back to the MA and bad follow-through. But they moved the market a lot and have controlled it for 5 weeks. The bears probably expect a second leg of at least one bar.
- We are in a developing trading range and are now in the middle, so it might be better to wait for clarity.
- Sell the close bears who sold the big bar are stuck, and some bears who sold the midpoint are waiting for profits.
- Bears who sold with a stop under the 3 or 4 consecutive bear bars are still short, the pullback to their entry point and then hoping for more profits.
- Some bears would have exited on the gift bar down to the MA – I think more did that.
- It was a bad sell below the bull bar and at the MA. However, small doji bars are not a strong buy. This kind of low-probability signal bar is needed for good swings.
- But I’m not convinced we have finished going down yet.
- The close of the month is currently inside the range of the bull bar—that is not a good sign for aggressive buying, so I don’t expect too many buyers above this month.
- It’s always in short, likely after 5 bear bars, but trading range, so expect sideways to down.
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