DAX 40 Breakout Mode, Bull Inside Bar

Market Overview: DAX 40 Futures

DAX futures moved sideways last week with a weekly bull inside bar. It’s a micro double top and bottom, DAX 40 breakout mode so next week is important. Probability favors the bear move down, but the math favors the bulls for a swing up to the moving average.

We are still always in short but those traders should exit above the past two weeks’ bull bars. If the bears can close below last week they might get a third week down for a possible wedge.

DAX 40 Futures

The Weekly DAX chart

• The DAX 40 futures was a bull inside bar, a doji and a micro double top.
• The bulls see it as the second consecutive bull bar and a possible double bottom with July 4^th. Bulls have been buying new lows since July and making money.
• How do we know? The pullbacks have gone above swing lows.
• The bulls see a tight trading range as a possible final flag for a final 3^rd push down. Maybe even a sell climax.
• The bears see 3 consecutive bear bars and a pullback. Then see we have sold off at the moving average since January and will continue to do so until it is no longer profitable.
• The bears see a High 1 last week that failed, a Low 2 would be a reasonable sell signal but it is low in the possible trading range. Last week was a bull bar so a bad sell signal, so most bears will wait for a bear bar to sell.
• The bulls want an upside break of the bull inside bar and tight trading range up to the moving average. Their issue will be if they get a breakout bar up, it will force bulls to buy too high and may become another leg down for the bears.
• The bears want a bear bar next week to sell below but there are probably buyers underneath this week looking to buy a second entry long, swing up to the moving average.
• Still always in short and better to be short or flat, traders can exit above bull bar closing above its midpoint. So because the always-in traders will exit above last week that is a reasonable buy scalp.

The Daily DAX chart

• The DAX 40 futures was a bear bar closing on its low on Friday so we might gap down on Monday.
• The bulls see a higher low possible major trend reversal and will look to buy above a bull bar closing on its high.
• Bulls want a bull breakout bar and a follow-through bar for a swing long. They are looking to finally get consecutive bull bars above the moving average.
• If you’re confused it is because of the weekly bull inside bar.
• Thursday was a surprise outside up bar and a reasonable swing buy above, but it’s high in a tight trading range. Traders might wait for another pullback lower to buy the second entry signal for the swing long.
• Notice how we made it above the prior lows on the retracement? That means limit bulls are making money buying new lows and scaling in lower. This could mean the trend is coming to an end.
• Bears see 3 consecutive bear bars last week after 2 strong bull bars so it’s a trading range. They want a Low 2 sell high in the range, but where is that?
• October 4^th is a reasonable target, so if you’re selling, a stop above Friday’s high would be reasonable as well.
• We might be forming a triangle so we need 2 more touches before seeing the breakout. So if we reject October 4^th and then keep a higher low, the odds for a bull breakout will be higher.
• The bears want consecutive bear bars to sell below and they might get it – traders held short into Friday. A bull inside bar can often be followed by an outside bar, so traders should be ready for confusion next week.

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