Market Overview: DAX 40 Futures
DAX futures went sideways last month with a weak buy signal and a small bull doji. It’s too high to buy above those bars, but some bulls will buy a new high. Stop is far away. DAX seems to pull back sharply after a tight trading range on the monthly chart, so the moving average and prior gaps are targets as well.
DAX 40 Futures
The Monthly DAX chart
- The DAX 40 futures went sideways last month with a weak buy signal, a small bull doji.
- It follows an inside bar, and traders will treat it like two inside bars, a triangle and breakout mode.
- Some traders will buy above or sell below. Most traders should wait for a good signal bar.
- The bulls might see it as two legs sideways after a strong second leg. But the channel is broad, so you also have to expect two-sided trading and bears to make money.
- In a trading range, traders fade a weak signal at the extremes.
- The bulls are disappointed by the High 1, which did not go anywhere in three months. If you buy a strong bull bar and three bars later it is still at your entry, that can be a good reason to exit.
- Nothing to sell here, but limit order bears will start to scalp, hoping to close some gaps below.
- If you’re a bull, your stop is far away, so you have probability, which means a bad risk reward. As a swing trader, pullbacks are needed to move stops up and free more capital to move higher.
- There was a small pullback, a bear bar, some traders might put the stop there, but it looks like a close target.
- Alternatively, bulls reduce their position and look to buy again. So we can get a strong pullback.
- Always in long still, so it’s better to be long or flat.
- Expect sideways to up next month.
The Weekly DAX chart
- The DAX 40 futures pulled back strongly last week, with a bear surprise bar closing on its low. We might gap down next week.
- It is the first bear bar to close strongly below the moving average, so some bulls will start to scale into buys there.
- The wedge top triggered, then a test and a strong move away. So bears see a lower-high major trend reversal. They will expect 10 bars and 2 legs.
- The bears want to eliminate the last swing points to set up a measured move down to the lower breakout points.
- That swing point was a little confusing. We had a bear bar as the low, then an inside bar and a strong bull breakout, which made traders question whether we were still in a strong trend.
- Now, closing below those bull bars, it is more likely sideways to down.
- Selling here after the trading range carries a lot of risk, so I think we will pull back next week to a better sell area.
- Some bulls will buy the close to get back to the low of those 4 bull bars and the trading range. They will exit if the next week is a follow-through bear bar.
- Surprises often have second legs, but the pullbacks can also be two-legged, so it’s probably better to wait for more information.
- One-bar breakouts are not as reliable, and trading ranges often have many of these types of climaxes.
- The swing point low is close, so we should reach it and see what is down there.
- If it is a breakout below a double bottom and a test, then the bears could get three legs down. We might be in the second already after the wedge to triggered.
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