Market Overview: DAX 40 Futures
DAX futures went sideways last week, with another doji in a pullback after a breakout. After a strong bull breakout to a new high and a great entry bar for the bulls, those bulls are wondering how much higher. Bears have nothing to sell, but we might drift back to close the gap. Bulls want to get a strong close next week for a measured move up and to get to the 19000 figure.
DAX 40 Futures
The Weekly DAX chart
- The DAX 40 futures went sideways last week with a bear doji high in a bull channel.
- It is the second consecutive doji and small bear breakout below last week.
- The bulls bought the High 1 and implied High 2 signals on the pullback to test the highs, and they got it.
- The bears wanted something stronger to sell below but didn’t get it. It’s not a good place to sell below anything yet. Some bull might get out below the second bear bar, disappointed.
- But most took profit at the new highs after that strong entry bar.
- Bulls have not been able to buy the moving average, so expect buyers below—maybe at the midpoint of that big bull bar or at the breakout gap from the High 2.
- Can bears sell above yet? I don’t think so until the body gaps have been closed.
- The RR is not great: Low probability and a small target.
- The other issue is if some might have been trapped by that strong breakout bar and need the pullback to reduce their loss.
- Bulls want to keep this gap open, so a bull close above that bear bar might force the bears up for another leg.
- There are already two legs, so one more makes sense. The first leg is part of the bear pullback, which is common in three push patterns.
- When in doubt, it is better to wait.
- If unsure, it’s best to trade the always-in direction, which is always in long, so expect sideways to up next week.
The Daily DAX chart
- The DAX 40 futures printed a bull bar, closing on its high on Friday.
- It is a High 2 at the MA in a bull trend, so it’s a reasonable buy setup above it.
- The bulls saw a strong bull leg to a new high, and the channel was so tight that traders expected the first reversal to be minor.
- The bears have got what looks like 3 legs down to the MA, so the buy zone.
- It’s a strong stop-entry buy setup and a weak limit-order sell setup. Bulls would like to reach that 19000 number just above, and a 2:1 would do it.
- The bulls’ problem is the dojis to the left. A lack of sustained buying up here means buying above what looks like a trading range.
- Bears want the High 2 to fail and break below for a measured move down to close the gaps below.
- If you look left at the bear leg earlier, it was also tight. Many bears scaled in above and have a chance now to exit breakeven, so I suspect buyers below as they exit.
- But you always have to be prepared for the opposite. A strong bear close on Monday might scare those bulls out.
- Always in long still, so expect sideways to up next week as we see how willing the stop-entry bulls are to buy high.
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