Market Overview: DAX 40 Futures
DAX futures moved lower last week with follow-through selling in a tight trading range, but it was not able to close below the bar from the week before. So it’s not as bearish as it could be. Bulls have finally got a chance to buy the moving average, and in a tight bull channel, it is reasonable to do that. The bears see a possible wedge top and want two legs sideways to down. But a total lack of bear stop entries that worked will prevent the selling from starting yet.
DAX 40 Futures
The Weekly DAX chart
- The DAX 40 futures last week continued in a tight trading range, with a bear doji closing just below the MA.
- The bulls see a bull trend, a final flag that keeps going, and we are heading sideways at the MA.
- The bears see that this TTR has gone on for about 20 bars, so the upward momentum has probably gone.
- The bears want a follow-through bear bar next week, preferably closing completely below the MA.
- Some bulls see three consecutive bull bars as a continuation pattern. But the problem is no gaps between them.
- The bull breakout did not get follow-through above the high of this leg. That’s a problem.
- The bears saw a failed breakout and got the minimum level of follow-through. But disappointing because it did not close below the prior week’s low.
- Best to be flat here in the middle of the tight trading range.
- If the bears get a bear bar and a pullback – it could be a reasonable short below – taking a chance that any buyers would have already appeared.
- Some bulls will probably scalp the first bar below the MA in so long. But I suspect it would be a scalp only.
- Other bulls see a test of the trend line and expect a test of the high before reversing.
- The biggest issue is the tight trading range which makes potential stop-entries, reliable limit-order fades, instead.
- It has an expanding triangle shape, so we could get a move down and a stronger move back to the highs. Confusion should keep traders BLSHS and taking quick profits.
- One bull argument is the open body gap currently below. Technically, the trend is still on and still 55% likely for bulls.
- Disappointing for both sides, so expect sideways to up next week.
The Daily DAX chart
- The DAX 40 futures was a bear bar on Friday, closing near its low, so we might gap down on Monday.
- The bulls had a strong leg in a trading range but failed to get buyers at the MA. Some bulls might be stuck above.
- The bears got follow-through and a bear microchannel down. There are usually sellers above the high of the last strong bar in a bear microchannel.
- But it didn’t even reach there. That is a sign of strong selling.
- The spike down is strong, so traders will expect two more legs – in a trading range, which is disappointing for traders, you mostly get only two legs.
- It’s a bear bar, so a sell signal for Monday. It is reasonable to get short, but it might only be a quick move with the inside bar.
- Bears want the leg to get down to the July low. The middle of the big expanding triangle is a magnet.
- Bears see a HH DT, a reversal pattern, and two down weeks so we might get follow-through selling.
- The bears want to put in a lower high before anything major happens. The bulls get getting new ATH, and that’s a problem for the bear case.
- Next week we might get below the Aug 8th low to see what’s down there.
- We are back in a tight trading range here. Expect limit-order traders, to sell here and sell more higher.
- Bulls will likely buy below and scale in lower.
- It’s okay to be short or flat here. We are still in breakout mode on the HTF, so the price action can whipsaw here, trapping traders.
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