DAX 40 All Time High, BO above TTR

Market Overview: DAX 40 Futures

DAX futures moved higher last week to a new Dax 40 All Time High. It was a bull breakout (BO), so traders will watch the follow-through buying next week. The bears are looking to short the trading range highs but haven’t had a good sell signal. Some bears got caught selling early, and we hit their stops. The bulls know a bull BO above a possible wedge top is low probability, but the measured move is large, so it is worth the swing for some.

DAX 40 Futures

The Weekly DAX chart

• The DAX 40 futures hit the All Time High (ATH). It was a big bull bar closing on its high so that we might gap up on Monday.
• It is a BO above an inside bar, which has a higher chance of failure.
• It also broke out above an expanding triangle, typically a trend continuation pattern.
• The bears see a bull BO above a bull channel, a low-probability event. It will fail 75% of the time, and the expanding triangle will become the final flag.
• If it is going to fail, it will do so within about 5 bars.
• The bulls see a tight channel with well over 20 bars above the MA, so they were happy to buy above and below bars betting on continuation.
• There are many measured moves – the main one is the ATH. We have closed all open bear BO gaps below and retraced the whole of last year’s bear move.
• But we are still at the top of the trading range. The bears will look for evidence of closed gaps to short strongly. They want a failed BO above the high of a trading range.
• The bulls want a follow-through bar or a reasonable pullback to the BO gap to confirm the test and look for a second leg up.
• It is also leg 3 of the channel, so traders will expect 2 legs sideways to down, maybe to test the MA or the start of the 3rd leg. It would be unusual to break strongly and not test the middle of the triangle.
• Some bulls will buy above the high, but most should wait for consecutive bull bars.
• Bears will expect the BO of the TTR to fail. Some will start shorting the distance of that bull bar above.

The Daily DAX chart

• The DAX 40 futures was a bull bar closing above its midpoint with a small tail above.
• It is the second consecutive bull bar, and it is a breakout above an expanding triangle and TTR.
• The bulls see an expanding triangle, a continuation pattern and a 3^rd leg up. They were always gunning for the all time high, and the bears never did enough damage to any bull legs.
• The bears see a bull channel and a lot of sideways price action – the sudden acceleration may be a trap they will look to reverse.
• But it is consecutive bull bars, open gaps, good bodies, BO and follow-through, so we are back to always in long.
• The bulls want a measured move of the height of the tight trading range (TTR) – and they might get a move of the size of the bull bodies now as a spike and channel.
• The channel line above has been resistance and might attract limit order bears.
• It was a bad buy signal below, which is now a magnet as the BO point. But the best the bears can get here is sideways until they start to close a gap.
• It’s a small pullback bull trend, and all the good bear bars have become buy signals.
• Expect sideways to up – it is a better stop entry buy, so likely a weak limit-order sell.

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