Market Overview: DAX 40 Futures
DAX futures moved higher last week with a DAX 40 big bull breakout bar. It has been non-stop higher since October, and traders want to see if there are buyers above this trading range high. The bears knew they would not get a bear trend but hoped for a trading range. A test of the prior breakout point and reversal down would confirm that. Short-term targets up are the measured move above. Bears want a double top, or higher high major trend reversal but need a bear bar to sell.
DAX 40 Futures
The Weekly DAX chart
- The DAX 40 futures was a big bull breakout bar closing on its high so we might gap up next week.
- It is the strongest bar late in a trend, forcing traders to decide whether it is a measuring or exhaustion gap.
- Next week is important to see if there is a follow-through.
- The bulls see the start of the second leg. A break above a tight bull channel for a measured move. It is a High 1 / High 2 buy from just above the moving average, which is a reasonable buy signal.
- The bears see a higher high above a breakout point in a trading range. Trading ranges are confusing and often go above and below swing points, while traders bet on failed breakouts.
- So, either it will work or not. Bears selling here will sell higher at the measured move targets, betting the pullback will be deeper below the Dec 12th high and they can scale in and make money.
- Bulls will buy the breakout follow-through and look to get out if the reversal has follow-through instead.
- Most swing bull traders should wait for a pair of consecutive bull bars closing on their highs before entering.
- Look left. March to June was a tight trading range, and we are trying to break above it. It is not unreasonable to expect some strong reversal here, like on Dec 12th.
- Better to be long or flat. We are always in long. We might form a tight channel, wedge top around the prior trading range support line.
The Daily DAX chart
- The DAX 40 futures was a bull bar closing on its high on Friday, so we might gap up on Monday.
- Friday went below Thursday, so it was a pullback and a Low 1 sell signal, high in a trading range. So it is low probability and a reasonable opposite (buy) signal.
- We are breaking out above the Dec 12th high, so traders are determining whether this is a measuring or an exhaustion gap.
- The bulls see a small pullback bull channel, pullback to the moving average and then a breakout for a second leg sideways to up.
- But this leg is stronger than the previous channel, so it might be climactic. A kind of second-leg trap. The bulls want to reach the measured move target above the 15000 Big Figure and the underside of the trading range above.
- The bears would see this as a breakout test of that range and have converted the bull trend into a trading range. They will look to sell reasonable reversals to swing back down into the lows of the range.
- But the bull trend/bull leg is strong. The bears failed to break 12000, and we have raced up since.
- We are always in long, and with consecutive big bull bars closing on their highs, bulls will also buy pullbacks as the spike converts into a channel.
- The bears want this to be a triple top with June and October, but they have failed to maintain control in many months.
- Expect sideways to up next week.
- Monday is important to see if we get follow-through above this range.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.