Market Overview: DAX 40 Futures
DAX futures last week was a big bear bar closing at last week’s low. Since October, it has been tough to be a bear. Limit bears couldn’t even make money selling prior highs. This might have become climactic, and as bulls take profits, bears might sell second-entry signals around here. The bulls have stopped buying above bars and might look to buy again at 15000 or the moving average. Bears need a follow-through bar here to convince traders a temporary top is in.
DAX 40 Futures
The Weekly DAX chart
- The DAX 40 futures was a bear bar closing at last week’s low.
- The bulls see a tight channel – maybe even a spike and channel bull trend.
- They see a second sell signal, but it is only a Low 1. Technically it is a bull micro channel and the first reversal down is usually minor and is a reasonable place for bulls to buy.
- The bulls also see breakout points and gaps above swing highs. Their stop is far away, so they might scale in as it moves closer to the moving average.
- The bears see a wide trading range with the All-time highs and a deep pullback. They see this as a possible wedge top or final flag and expect two legs sideways to go down to the 15000 Big Round Number and the moving average.
- But where are the bear bars? There have only been six bear bars since October on the weekly chart, which tells you it was easier to make money buying. The bears know that and might only sell above this week and not on a stop below.
- The bears need consecutive bear bars to convince them to sell above the highs. So far, limit bears have not made money – that tells you traders expect reversals to fail.
- Bulls might buy a 50% pullback of this last leg and around the prior swing high just below 15000.
- If you are trading always-in, you might exit below this week and look to buy again above a bull bar.
- Traders should expect sideways to down next week as they decide whether a two-legged correction is required.
The Daily DAX chart
- The DAX 40 futures was a big bear bar closing near its low on Friday.
- It was a bear surprise bar at a prior breakout point.
- It was also the first bar to close below the moving average in two months.
- It was a bear surprise in a tight trading range and closing below the moving average.
- The bulls see a tight channel, and now we are going sideways. They know the first time we go below the moving average, it is likely to attract buyers.
- A bear bar around and closing below the moving average becomes a reasonable buy signal in a tight bull channel.
- A logical place to buy below would be the 15000 Big Round Number.
- The bears see the end of a tight channel and a possible final flag and see we are going sideways. They have started selling above bars and might start to sell below bars once consecutive weekly bear bars close near their lows.
- Currently, most traders should be long or flat in a tight channel.
- The bulls need a breakout and test of the 15000 Big Round Number as we reversed down from here last year.
- The January channel was so tight that bulls might look to buy a 50% pullback of that and see it as a spike and channel bull trend.
- Bears need a lower high which would become the right shoulder of a head and shoulders top.
- Because we have been always in long for two months, although always-in trades might exit below this week, it is a good sell signal in a bad location: right at the moving average in a bull channel.
- Expect sideways to down next week.
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