DAX IndexShort
#202437 - priceactiontds - weekly update - dax
Good Evening and I hope you are well.
tl;dr
dax: Full bear mode. Bull trap and of August after making a new ath. Market is clearly in a hurry to go down again. Stairs up, elevator down. Most likely the bear gap to 18750 will stay open and every short sl has to be around that price. 1. tp is 50% pullback 18000 and as of now I expect a pullback there or more sideways movement. Below 18000 we will see 17400 fast.
Quote from last week:
comment: Selling is already too strong for a pullback in a bull trend. We are in a big trading range and on our way to test the lower range somewhere between 17000 - 17500. Do we get there in a straight line like we went up in August? Highly unlikely but so was the climactic selling and the insane reversal over the past 5 weeks.
current market cycle: big trading range
key levels: 17000 - 19000
bull case: As expected, the first decent selling on Monday and bulls are running for the exits. Climactic buying, followed by climactic selling. I don’t expect the bulls to fight this, like the bears did not fight anything from 17400 to 18990. The 50% pullback at 18000 is a decent target where the bulls could try to stall it and hope for a bounce. At this point it’s useless to try to call a top or anything beyond the next 2 weeks. If anything, it’s 50/50 if we make another ath this year or not.
Invalidation is below 18500.
bear case: Bears came around right below 19000 and produced strong enough selling to trigger many stops. Bulls are fearful that we test all the way back down to 17000 and that’s why we don’t see much resistance from them. In any bear case over the next weeks, the bear gap to 18730 has to stay open. On the weekly chart it’s now an expanding triangle which is a form of a trading range. To hit 17000 over the next 1-2 weeks would be amazing for the bears again but I highly doubt they could get the market below, without any serious deterioration of macro schmackro stuff. Something has to break for this market to trade back to not maximum overvalued bubble territory. If you don’t think dax above 18000 is bubble territory while gdp is -0.3% for 2023 and flat at best in 2024, I can’t help you.
Invalidation is above 18700.
outlook last week:
→ Last Sunday we traded 18906 and now we are at 18301. It was too early for shorts last Sunday but during Tuesday’s session it became clearer that the market wanted to go down.
short term: Bearish but only on momentum again. Any pullback has to stay below 18700. Next targets for bears are 18000 and below that is 17500. Fun times ahead.
medium-long term - Update from 2024-09-01: 4 Months left in 2024 and I do think the market is in a trading range where the upper area is around 19000 and the lower area is probably 17000 or 16000 if something bigger comes up. Since we are at the very top, I expect the market to go some sideways before trying to go down again. Next 2000 Points will be made to the downside but it’s too early to short this.
current swing trade: Decent to be in swing shorts now. Stop has to be 18700 or even 19000. Will join the bears on Monday, if they go straight below 18270 or on a decent pullback to 18500.
chart update: Nothing. Removed the bull wedge and added the bear gap.
tl;dr
dax: Full bear mode. Bull trap and of August after making a new ath. Market is clearly in a hurry to go down again. Stairs up, elevator down. Most likely the bear gap to 18750 will stay open and every short sl has to be around that price. 1. tp is 50% pullback 18000 and as of now I expect a pullback there or more sideways movement. Below 18000 we will see 17400 fast.
Quote from last week:
comment: Bulls printed a new ath and if you would look at the RSI, which I don’t, it would show a divergence. You really really don’t need the RSI to tell you that. Even so, market could go higher and there is no reason to short this yet. I am 90% certain this is not a W1 of a new bull trend that will break above the bull wedge but rather a retest of the highs, in this case a higher high, and it will reverse soon enough. A bigger pullback is overdue but that does not mean you can short this yet.
comment: Selling is already too strong for a pullback in a bull trend. We are in a big trading range and on our way to test the lower range somewhere between 17000 - 17500. Do we get there in a straight line like we went up in August? Highly unlikely but so was the climactic selling and the insane reversal over the past 5 weeks.
current market cycle: big trading range
key levels: 17000 - 19000
bull case: As expected, the first decent selling on Monday and bulls are running for the exits. Climactic buying, followed by climactic selling. I don’t expect the bulls to fight this, like the bears did not fight anything from 17400 to 18990. The 50% pullback at 18000 is a decent target where the bulls could try to stall it and hope for a bounce. At this point it’s useless to try to call a top or anything beyond the next 2 weeks. If anything, it’s 50/50 if we make another ath this year or not.
Invalidation is below 18500.
bear case: Bears came around right below 19000 and produced strong enough selling to trigger many stops. Bulls are fearful that we test all the way back down to 17000 and that’s why we don’t see much resistance from them. In any bear case over the next weeks, the bear gap to 18730 has to stay open. On the weekly chart it’s now an expanding triangle which is a form of a trading range. To hit 17000 over the next 1-2 weeks would be amazing for the bears again but I highly doubt they could get the market below, without any serious deterioration of macro schmackro stuff. Something has to break for this market to trade back to not maximum overvalued bubble territory. If you don’t think dax above 18000 is bubble territory while gdp is -0.3% for 2023 and flat at best in 2024, I can’t help you.
Invalidation is above 18700.
outlook last week:
short term: Neutral again. I’m confident we will reverse soon but it’s too early to be looking for shorts. Bears need to start making lower lows and lower highs before I start. What do I need to go long? Only scalps after pullbacks for me. Very little interest in buying up here because I do not see this going to 19200.
→ Last Sunday we traded 18906 and now we are at 18301. It was too early for shorts last Sunday but during Tuesday’s session it became clearer that the market wanted to go down.
short term: Bearish but only on momentum again. Any pullback has to stay below 18700. Next targets for bears are 18000 and below that is 17500. Fun times ahead.
medium-long term - Update from 2024-09-01: 4 Months left in 2024 and I do think the market is in a trading range where the upper area is around 19000 and the lower area is probably 17000 or 16000 if something bigger comes up. Since we are at the very top, I expect the market to go some sideways before trying to go down again. Next 2000 Points will be made to the downside but it’s too early to short this.
current swing trade: Decent to be in swing shorts now. Stop has to be 18700 or even 19000. Will join the bears on Monday, if they go straight below 18270 or on a decent pullback to 18500.
chart update: Nothing. Removed the bull wedge and added the bear gap.
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