Market Overview: DAX 40 Futures
DAX futures went sideways last week, high at a measured move target in a bull channel. The bulls wanted a breakout and follow-through but got sideways, so maybe one more push up above. Bears want to close the gap immediately, but there will likely be more buyers below betting on 19000 cash above.
DAX 40 Futures
The Weekly DAX chart
- The DAX 40 futures went sideways at a measured move target high in a bull channel.
- We are just below 19000 cash, so we might need to reach it before any correction happens.
- The bar went above last week’s but closed on its midpoint so technically a failed breakout. But with a weak bear close, so more likely a pause bar.
- In earlier breakout legs that is a good buy the close bar to get a discount.
- The bulls got a pullback and a High 1 or implied (LTF) High 2 breakout, with the pullback as a measured move target.
- The weak bear doji after the High 1 was a sign that bears weren’t confident of holding short.
- Bulls see a second leg up in a bull channel. Most traders will take partial profits high in a channel and look to add back on lower.
- The bull bar is big, so traders might wait for a pullback to buy into it.
- Other traders see it as a breakout and pullback test of the breakout point. If that gap stays open, a stronger case exists for more up.
- The bears had 3 good bear bars, so expect a second leg sideways to close that gap. It would be surprising if it did not.
- Always in long, so it’s better to be long or flat.
- Always in, the bulls can get out below a decent reversal signal.
- There is nothing to short here. Most limit order bears would wait to see if earlier traders made money before scaling in.
The Daily DAX chart
- The DAX 40 futures went sideways on Friday after a strong sell-off on Thursday.
- Bulls see a High 2 in a bull trend, right on the breakout point, so it is a good risk-reward trade.
- But the bar is small, so we will likely test below it before going higher.
- Bears see an expanding triangle and sideways after at least two legs up. So there might be one more push up before a correction.
- But bears have had an inside bar and an outside bar – not great signal bars, and so it is unlikely the bears will enter with stop orders.
- The bears see a broad bull channel and likely went always in short on the prior leg. I’ve highlighted the pullback distance for traders to see the change.
- I’m not suggesting shorting, but it is more of a sideways to up market. That means big bull bars will attract more profit-taking and not new entry positions.
- Can the bears reach the moving average with a small push sideways to down? Friday is not a great signal bar, so likely more sideways.
- Can you argue the always-in bulls got out below the Thursday bar? Some might. Because it is outside down, that means we triggered a bull breakout. For me, that reduces the chance this will be the top.
- Bulls will scale in here, betting more buyers at the moving average and trapped bears below providing support.
- Expect sideways to up next week.
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