#202422 - a weekly price action market recap and outlook - dax
Good Evening and I hope you are well.
dax cfd
Quote from last week:
bull case: Bulls got a new ath and market sold off for 200 points to close the week below 18900 which was the second weekly rejection of that price level. Bulls need to keep this pull-back shallow, inside the small bull channel and above the daily 20ema for continuation. The bull channel and the daily ema are close enough for me to think we either go sideways to touch them or dip and bounce. That would be a perfect two legged correction and odds would favor the bulls for a third leg up. Invalidation price would be somewhere between 18500 - 18600 and then the big bull trend line has to hold if we get there or the trend is done and we are in a trading range.
comment: Got exactly that second very weak leg down to the daily 20ema which is currently at 18650 and market could not close below it. Bulls are in full control and unless we see strong selling below the ema, odds favor another leg up to at least 19000 but I think another higher high is probable. Bears are not showing any strength and all important support prices and trend lines are holding. Close below 18400 would mean a daily close below ema and break of the bull trend line, that would change things for the bears and solidify this as a trading range.
current market cycle: Bull trend until bears break 18400 (the big bull channel line)
key levels: 18400 / 20000
bull case: This is a textbook two-legged (ABC) correction to the moving average and bulls got the most perfect signal bar to go long again on Friday. Bears have few arguments here until they break below 18500. Next for bulls is very likely a breakout of this bull flag for a retest of 19000 and then maybe higher. Since this pull-back was so weak, we could very well get another leg up. I have 19280 and 19650 as measured move targets. Invalid below 18400/18500.
bear case: I said that last time we printed a new ath in April, we sold off for 1300 points in a very tight bear channel, which was basically an endless bull flag which ended with a climactic reversal at 17600. So how does it help with trading? We could go up and down from here? Yes. You wait. We are near the high of the bull flag and a clear breakout-retest-buy setup is probably around the corner. If bulls fail at 18800 again, good short to sell down inside a tight trading range back to around 18650. There is absolutely a small possibility that this just continues down in this tight bear channel like we did early April.
outlook last week: “Can’t be anything but neutral with if-statements. If we strongly break below 18600 and bears keep the selling pressure high, this higher high double top could have been it and we get 18300-18400 next. If bulls (they are slightly favored) manage to break above 18900 again, we will most probably retest the ath or go directly into the third leg up or W5.”
→ Last Sunday we traded 18805 and now we are at 18765. Neutral I said, neutral it was. Levels given were spot on and market closed 40 points below last weeks close. Perfect week for mean reversion.
short term: Well, we made it 40 points lower in a bull flag. Nothing of my premise changed, so I did not change my short term outlook. But I still believe we will see a bigger second leg down (first was early April down to 17600) to at least 17600 (again) over the next 2-4 weeks.
Can’t be anything but neutral with if-statements. If we strongly break below 18600 and bears keep the selling pressure high, this higher high double top could have been it and we get 18300-18400 next. If bulls (they are slightly favored) manage to break above 18900 again, we will most probably retest the ath or go directly into the third leg up or W5. —unchanged
medium-long term: 17000 over the next 2-3 Months but 16600 could be tough so that could happen early 2025 as well. Will update this along the way.
current swing trade: No current position. 2 Swings for small profit last 7 trading days opened and closed.
Chart update: Third push up (W5) is my preferred path for the next 2 weeks. Would update the chart, if bears brake 18500.
dax cfd
Quote from last week:
bull case: Bulls got a new ath and market sold off for 200 points to close the week below 18900 which was the second weekly rejection of that price level. Bulls need to keep this pull-back shallow, inside the small bull channel and above the daily 20ema for continuation. The bull channel and the daily ema are close enough for me to think we either go sideways to touch them or dip and bounce. That would be a perfect two legged correction and odds would favor the bulls for a third leg up. Invalidation price would be somewhere between 18500 - 18600 and then the big bull trend line has to hold if we get there or the trend is done and we are in a trading range.
comment: Got exactly that second very weak leg down to the daily 20ema which is currently at 18650 and market could not close below it. Bulls are in full control and unless we see strong selling below the ema, odds favor another leg up to at least 19000 but I think another higher high is probable. Bears are not showing any strength and all important support prices and trend lines are holding. Close below 18400 would mean a daily close below ema and break of the bull trend line, that would change things for the bears and solidify this as a trading range.
current market cycle: Bull trend until bears break 18400 (the big bull channel line)
key levels: 18400 / 20000
bull case: This is a textbook two-legged (ABC) correction to the moving average and bulls got the most perfect signal bar to go long again on Friday. Bears have few arguments here until they break below 18500. Next for bulls is very likely a breakout of this bull flag for a retest of 19000 and then maybe higher. Since this pull-back was so weak, we could very well get another leg up. I have 19280 and 19650 as measured move targets. Invalid below 18400/18500.
bear case: I said that last time we printed a new ath in April, we sold off for 1300 points in a very tight bear channel, which was basically an endless bull flag which ended with a climactic reversal at 17600. So how does it help with trading? We could go up and down from here? Yes. You wait. We are near the high of the bull flag and a clear breakout-retest-buy setup is probably around the corner. If bulls fail at 18800 again, good short to sell down inside a tight trading range back to around 18650. There is absolutely a small possibility that this just continues down in this tight bear channel like we did early April.
outlook last week: “Can’t be anything but neutral with if-statements. If we strongly break below 18600 and bears keep the selling pressure high, this higher high double top could have been it and we get 18300-18400 next. If bulls (they are slightly favored) manage to break above 18900 again, we will most probably retest the ath or go directly into the third leg up or W5.”
→ Last Sunday we traded 18805 and now we are at 18765. Neutral I said, neutral it was. Levels given were spot on and market closed 40 points below last weeks close. Perfect week for mean reversion.
short term: Well, we made it 40 points lower in a bull flag. Nothing of my premise changed, so I did not change my short term outlook. But I still believe we will see a bigger second leg down (first was early April down to 17600) to at least 17600 (again) over the next 2-4 weeks.
Can’t be anything but neutral with if-statements. If we strongly break below 18600 and bears keep the selling pressure high, this higher high double top could have been it and we get 18300-18400 next. If bulls (they are slightly favored) manage to break above 18900 again, we will most probably retest the ath or go directly into the third leg up or W5. —unchanged
medium-long term: 17000 over the next 2-3 Months but 16600 could be tough so that could happen early 2025 as well. Will update this along the way.
current swing trade: No current position. 2 Swings for small profit last 7 trading days opened and closed.
Chart update: Third push up (W5) is my preferred path for the next 2 weeks. Would update the chart, if bears brake 18500.
