Market Overview: DAX 40 Futures
DAX futures went higher last week with a bull outside up bar. Bears tried to take control but couldn’t get much below 18000. Middle of a trading range in a bull channel, so still more likely sideways to up. We could go sideways here as traders decide what to do. The bears could try and sell again, but was their second leg the tails on the outside bar?
DAX 40 Futures
The Weekly DAX chart
- The DAX 40 futures went higher last week with a bull outside up bar.
- The body is small, so there was a big fight over the price last week, and the bulls won.
- Bull channel, two clear legs up, but the third is not so clear.
- I don’t think the bulls are finished yet because of this the third leg.
- Sometimes, the third leg is truncated and cut into smaller pieces that roughly go the same distance as the others for symmetry.
- So, the bulls argue about a two-legged pullback and want a big leg 3.
- The bears see 3 legs up with a failed breakout above and sideways for 20 bars.
- But the wedge never had a good sell signal bar that took off.
- As we said, we are in the 18000 – 19000 range. 19000 was too high, and 18000 was too low so that we might go sideways here for a while.
- We are back in the top third of this smaller trading range, and it is forcing you to buy above a bad signal bar high in a TR, so most traders should wait on this timeframe.
- Bears are likely above the top of the last sell climax and will exit if the bulls get a strong FT bar.
- I have to give the bull an extra 5 – 10% probability because of the 20 and 200 MA.
- Had bears sold below that sell climax (bad idea anyway) and triggered sellers, you could argue pullback for more down.
- But inside bar reversal then breakout and pullback test is strongly against selling 18000.
- Back to (if we ever left?) always in long so expect sideways to up next week.
- Bears can argue we broke the last swing point – fair. But did those bulls get put under much pressure? No – it instantly reversed.
- Probably a better buy in the buy zone of this outside up bar if we get a chance.
The Daily DAX chart
- The DAX 40 futures went higher on Friday as the daily bears got stuck twice, and we reversed up strongly.
- Bears who sold the close of Monday got a decent profit – 2:1 – good job.
- If you sold under Monday and didn’t take 1:1, you had to panic out of the trade, as it broke out strongly against you with follow-through.
- Tuesday bears who sold the close got stuck as it never returned to relieve them.
- It was a weak sell anyway, as it was a big bar, and we probably expected an inside bar the next day. But this is what happens when you take low-probability trades. They turn on you!
- Bears had a spike, channel down, and a couple of attempts at the channel, but it never culminated in a strong follow-through below 18000.
- The bulls are taking over, and if they can close above that bear sell climax, a measured move up to 19000 is likely.
- But then it’s in the middle of a trading range. There is a big tail above, so there is a weak buy above, but it’s more likely to go up.
- There are many overlapping bars, so it’s okay to wait for more information, but I suspect buyers below bars next week and at the MA as the bear spike traders exit breakeven.
- Always in long now with 3 consecutive bull bars above the MA again
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