Market Overview: DAX 40 Futures
DAX futures rose last month with a potential failed breakout in a bull channel. A likely parabolic wedge top, a stronger breakout on a higher time frame, and traders wonder how much of the breakout gap will stay open. Bulls are sitting on good profits, but bears haven’t triggered a good signal yet. So expect sideways to up next month with buyers below.
DAX 40 Futures
The Monthly DAX chart
- The DAX 40 futures went higher last month but did not close higher than the prior two months, so this was a failed breakout in a bull channel.
- The prior month was a pullback and a Low 1 buy in a bull microchannel.
- This month, we immediately opened and went up to a new ATH but could not close at a new high, so it is not as bullish as it could be.
- The bulls see a pause and possible leg 3 in a parabolic wedge top. They expect two sideways legs to go down and then continue.
- A parabolic wedge top is a breakout on a higher time frame.
- Only one bear bar in the past 6 bars, soothing for bears to do here.
- There is a strong gap above the MA, so there is acceleration. Bulls will look for reasons to take profits. Above the high of that bear bar was a good place.
- Bears see a trading range and a breakout, a buy climax up to near 19000 and sideways.
- We probably need to reach it because we came so close to 19000.
- It’s a bull bar, so it’s a reasonable buy signal for next month. Not a good sell below.
- Always in long, so traders should be long or flat.
- Expect sideways to up next month.
The Weekly DAX chart
- The DAX 40 futures went lower last week with a bear doji with a small body.
- It is the 4th bear doji in a row, so there is a pause after a very strong bull momentum up.
- The character of the market is changing.
- The bulls see three legs in a tight bull channel, but the breakout gap closed immediately, so we should transition into a trading range soon.
- There was a strong bull bar and bad follow-through, so there was a buy climax and a reasonable place for bulls to take profits. After the two dojis, disappointed bulls could exit at the highest close.
- So that means no bulls are trapped, and it is not a strong reversal bar.
- After the three good bear bars, bears see a trading range. We said sellers would likely be above, and there were.
- Limit order bears are making money now, so they are likelier to find buyers much lower, perhaps near the bad buy signal (bear doji) that came before the bull climax bar.
- We haven’t touched the MA in over 20 bars, so buyers will likely be there.
- Some bears got trapped, with the second entry short and didn’t trigger. It was aggressive.
- So, just above the MA is also a magnet.
- Can you sell here? It is a micro wedge bottom on the lower timeframe and a pullback in a bull trend, so it is a bull flag. Bears scalpers will, at best, get 1:1.
- Most bulls should wait for them to exit that scalp before looking to enter.
- Always in long still, but transitioning into a trading range.
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