Dax40 Weeks Review 03 10 22 - 07 10 22


Dax40. Monday 03 10 2022. Pre RTH Kick Off Notes


Overnight gap down into lower 11800 zone and bounced off 11810 level from our charts last week. Futs gap now filled. Data No key event data today. NB while it is a German Bank Holiday - trading remains as normal. Overview Dax continued to slide last week putting in a 3rd consecutive weekly red candle as it pushed down into the Nov 2020 range per the above chart with only 3 green days in the last 14. As mentioned previously this whole area down to around 11350 - 400 was a fast drop and rebound area as we were coming out of the Covid pandemic so we might expect it to be volatile as we re-trade these prices and could be equally as "fast" should we trade down to test these lower levels. The market has memory. There is nothing from a macro economic perspective to suggest we are bullish with the recent gas pipeline news (sabotage?), inflationary pressure on rates and looming recession. From a technical standpoint its also worth noting the measured move we have been watching together with the covid low to ATH Fib and the concept of 100% range expansion. All three of these technical views of the chart suggest we still have room to go lower. See above chart. ​ But, the market is always forward thinking so any "good" news will likely be jumped on and could spark a short cover rally - something we have to bear in mind as traders. Indeed a short cover rally could spark at any time - good news or not - after a period of sustained downside as the market tries to catch out weaker hands. One other technical aspect we need to be aware of is the 200 Week moving average on the S&P - see chart below. We tagged it on Friday and apart from the Covid smash down it has held the lows on S&P on the two most recent previous occasions in 2016 ands 2018 triggering a rally both times. Of note also is that the halfback of the Covid low to ATH is around 100 points lower. These two reference levels on the S&P will be important this week if bulls are to have any chance of staging a rebound. We need to keep a close eye on the US as some relief bounce could trigger in which case the same could push Dax to the upside. Todays Trade Plan The overnight low at 11810 and the 11780 - 810 zone is the first downside level to watch for whether it retests and holds for any upside. Failure here takes us deeper into the November 2020 price range and lower tests. We have a cash gap at 11786 and of note is that the 11800 zone sparked a nearly 500 point rally last time it was tested nearly 2 years ago. Different circumstances now so whether we get anything like that now is highly debatable but again the market has memory. Below 800 we start to get a bit more H1 structure but there is little in terms of key support, as we have said before, until we test down to the lows of this leg at around 11350 - 450. To the upside the first key R level / zone on D1 is around 12400, last Tuesdays high and above here 12450 and 12600. Before we get there though we have Fridays high at 12140 and the 12175 - 12200 zone which needs to clear. Also look out for a pcc gap close and inventory correction. Given the ongoing bear trend and pessimistic macro outlook my plan remains to sell bounces in the first instance. We are not in BTD (buy the dip) mode by any stretch right now and selling rips has the better odds. Any test back up to Fridays highs at 12120 - 140 and above at 12175 - 12200 look good 1st test shorts as is any retest of higher levels at last weeks highs around 12380 - 400 which I will look to short. To gain any real upside momentum Dax needs to clear and hold above 12400. Any push down to around 11800 overnight lows and I will be looking for 1st test long fades given constructive pa. As always the H1 zones remain my go to for set ups either long or short particularly in this highly volatile lower 2020 range where poor trade management and ill discipline by taking poor trades at lesser odds levels can cost you dear. Stick to levels/zones and watch for fades, breaks, false breaks and pullbacks. NB: I´ll have an eye of S&P at all times as mentioned above. Levels R1 - 12175 - 12200 R2 - 12290 - 12310 R3 - 12385 - 12405 R4 - 12450 - 12475 ​ S1 - 11780 - 11810 S2 - 11705 - 11730 S3 - 11600 - 11620 ​ Long Set Ups Any dip to overnight lows and signs of holding the S1 11800 zone would be a good 1sts test long - watch for a cash gap close at 11786 for a bounce - as would any move up and hold over pcc / 12140 to test higher R levels. However as mentioned longs do not provide the better edge given the downside pa so don't overstay your welcome when taking any. ​ Short Set Ups Better odds on shorts remain my preferred trade option as we start the week. Any 1st test of the 12120 -140 and or 12175 - 200 in the first instance and higher levels thereafter. ​ The US

As said above the S&P is at a key level tagging the 200WMA last Friday. It also gapped down overnight but is now filled. If no bounce from here @ 3550 - 3580 S&P tests lower to 3500 - 3520 on the index. Note, while we are 5 days away still, the NFP data on Friday will be key this week and we could wait for any bounce to materialize until then. However we will have more market generated data by then to assess later in the week. Summary Shorts are the better odds trades until (if) we move over 12400 and even better over 12600. I will short 1st tests of R zones if we move higher as a 1R loss is still a good bet given the downtrend and bearish conditions, expecting that if lower R zones fail, we are still more likely to get good fade shorts as we move to higher R zones / exhaustion pa. On the flip side as day traders we should also be looking at momentum and pa to take long trades from lower S and from broken R zones should we move higher looking to catch zone to zone moves in both directions. While we are bearish with better odds on shorts there will still be opportunities for longs on intraday pa. ​​ RTH Post Session Review

Nothing much to say as there was very little to do. PA was muted maybe because of the German bank holiday. In terms of regular set ups there were a couple of opportunities to jump in - one at a break over the opening level and one at a break above the pmh. Both were minor pullbacks as price proceeded to grind higher. We also had two short scalp opps from gap close at pcc and from a 1st test of R1 - neither produced much in terms of points. The most important event today was the miss on ISM Manufacturing pmi which was the lowest in 2.5 years and for the first time showed that output ( and some heat in the labour mkt) may be reducing in line with Fed aims. One swallow does not a summer make - as the saying goes but at least a little bit of good news re inflation! NFP on Friday will be eagerly awaited. ​​ Dax40. Tuesday 04 10 2022. Pre RTH Kick Off Notes Apologies for no kick off notes this morning but I have been up all night, and.... well .... just ill. I suspect it is covid as a few members of my family tested positive yesterday - after a wedding last week - and I suspect I will do the same today. Just when we are all thinking covid has run its course and, while it will be around for a long time, it will be mildly uncomfortable if we get it at best, I can tell you its pretty bad. Hopefully it will over with quickly. I´ll keep you posted. Again many apologies compadres. I´m off back to bed ! Overview Levels Bullish scenarios ​​ Bearish Scenarios ​​ The US Plan Summary RTH Post Session Review ​ ​ Dax40. Weds 05 10 2022. Pre RTH Kick Off Notes

​ ​ ​ ​ Tight overnight range - no surprise after the last two days run up - coiling around 12600 - again no surprise as its a key level and been on our charts for a long while. Could be we consolidate here for a day which would make sense. Data US ADP employment data at 2.15 CET and ISM Services pmi at 4.00 pm Overview Apologies for yesterday. Covid or not (I didn't test it) I was just whacked out with whatever it was. Anyway we move on and thanks for your get well soon comments - appreciate it :). What a difference a day makes. From being bearish Monday we kicked off a short cover rally as I said could happen and it certainly did. The combination of the 200WMA on S&P which I posted, together with some better news for once on the "fighting inflation" front with the miss on ISM manufacturing pmi´s which suggested the labour market may be cooling along with output, helped put stocks back on the front foot and roused traders "animal spirits". Dax also tagged the 11800 zone we had been watching which remembered that it triggered a strong rally back in Nov 2020 and did the same again! The market has memory. Consequently we have moved up nearly 900 pts from the 11810 low Monday pre market and are taking out weak shorts as we go. All R zones were melted through with ease in the past couple of days as the bulls reasserted some strength. It is another question entirely where this "relief" rally will end but that's not our concern - all we need to do is to trade what we see. However, we have moved a long way in one way traffic with no decent pullback so that has to be on our radar for today and we are due a pullback. The good thing from our viewpoint is that this volatility with D1 ATR > 300 gives us plenty of opportunity. Of note also is that while Sept and particularly the last half of Sept is typically the most bearish month of the year seasonally, Oct is typically the start of the bull run up to year end - something for any newer traders to bear in mind - I know you old hands know this :). Whether this is the case this year I don't know - we are still in a bear market. Todays Trade Plan Given the past 2 days run up I anticipate more of a consolidation day as we wait for the next move. We are at a good staging post here around 12600 which was a good target for bulls (the halfback of the D1 leg from 13575 to 11810 was tagged by yesterdays high) and is a key D1 R level where bulls can cool off while considering what's next. If we get a consolidation day then we can expect some chop around here. We could also expect some pullback as we have not had one in this one way push so I will be looking at good S to maintain the rally at @ 12450 and 12380 this years (previous) lows. I will take 1st test longs at either or both these levels depending on pa. Should we push higher the next decent R is around 12900 and slightly higher and the 13050 level (note the DMA50) with a few H1 levels on the way. My instinct is that today will be more of a scalping chop day but i will be quick to change if we see either any strong continuation pa or any exhaustion and downward pressure. ​​ Levels R1 - 12800 - 12820 R2 - 12920 - 12940 R3 - 13055 - 13080 S1 - 12450 - 12475 S2 - 12395 - 12415 S3 - 12290 - 12310 S4 - 12120 - 12140 Long Set ups Any dips back to the yearly lows (prior to this dip to 11800) at S2 are a good 1st test long opp with possible longs from 12450 (S1) along the way. Any continuation higher look for pullbacks to jump on. Short Set ups After such a strong one way move we can expect some exhaustion / pullback. Watch any move up to yesterdays RTH highs at 12680 for a short scalp opp. Similarly any moves into higher resistance zones and look for roll over / false breaks type pa for shorts. ​ The US



We have had a similar push in US markets from good HTF support levels we have previously noted. the ISM data helped it along the way. The target for the S&P index would be 3830 and 3900. Note the push up yesterday was capped at the 38.2 % of the down leg. Support is now at 3720 on the D1 and bulls will want to defend this if there is to be any further push. Failure and we could test lore again. Summary We are clearly staging a relief rally in a bear market. Nothing has changed on the macro front albeit some initial signs of good news with US ISM pmi on Monday. how far we have to go is anyones guess. But we are not in the guessing game. We know our level, watch pa and act accordingly. ​​ RTH Post Session Review

​ ​ ​ ​ ​ ​ ​ ​ As we expected a consolidation type day for the most part after a strong couple of green candle days. There were opps though as always. The first was the open drive up to the pcc and yesterdays highs - it didn't quite get there but anyone watching carefully could have shorted up there for the best trade of the session. Apart from that we had a couple of scalps as it was ranging - one from the 50% pullback - a regular set up and one from just above a bit later just under the open level. Importantly both were at the 12600 level - a level we have had on our charts for some time. Then we had the planned long from S1 to close out the session. It wasn't a great day in terms of points but could have been a good one nevertheless if you took them. Whatever you traded or didn't - there is always tomorrow. Bring it on :) ! ​ Dax40. Thurs 06 10 2022. Pre RTH Kick Off Notes

Premkt range is like yesterday narrow @ 65 pts and forming a triangle, again same as yesterday. Maybe pointing to the same type of pa we got yesterday. Gap up open atm as I write Data Nothing of any great impact. We have German Factory orders at 8.00am and US Unemplymnet cliams at 2.30pmOverview I wrote yesterday that we could expect a pullback in this relief rally and we got one. We had a better dip (is BTD briefly back on the scene ?) to good support at the 12450 zone and bounced, currently > 200 points and counting. I said I´d be looking to buy pullbacks to here and it played out perfectly. Dax has now firmly recovered its July lows - a good sign for any rally and is now attempting to push over 12600 another previous key support level. This pa combined with the seasonal strength we usually get in October has all the signs of a decent rally at present. Whether it will be sustained I suspect is dependent on the NFP data tomorrow. The US S&P also put in a good push from key support at 3720 (also noted above in yesterdays notes) and moved up 80 pts or so. Our plan worked perfectly on both Dax and the S&P for those of you who traded it :). ​ The Feds Daly was on the wires yesterday noting the NFP was in her focus to see whether or not the rate hikes are having the desired effect of reducing the hot US labour market. If we get a miss tomorrow we could see this rally gain some further momentum. If a beat then its debatable whether there is enough steam for any higher. But that's tomorrow. For today I suspect we may get a bit more of the same as we had yesterday - consolidation with a bit of lackluster chop thrown in for good measure in the morning session awaiting further cues from the US later. As I write our first R zone of interest is holding higher prices at @ 12700. The halfback of this whole leg from Sept 13th highs to Oct 3rd lows is at 12695 - a key level for Dax to move over if we are to get more upside. Note we have a cash hole formed between Mondays close and Tuesdays open and 12670 is not closed as it missed by a few point during yesterdays RTH session though it looks like it will almost certainly be filled today given its proximity to the overnight range so far. Yesterdays pcc as at 12517 which if filled today and holds would form a HL above yesterdays dip - thereby providing more support for higher prices. Todays Trade Plan Given we seem to be moving up and holding good supports I will be looking for dips to buy. I will take a trade long on any dip back down to yesterdays low zone around 12450 - 12475 noting a possible gap close opportunity a little higher at pcc 12517. I have not relabeled zones today as they still represent better S&R zones as they are but we should note the S zones above S1 as zones of interest which could hold prices to the downside. Failure at 12450 and we could push down to 12395 our S2 for today which looks also to be a good 1st test long opp. My feeling for today though in general is that as we get closer to the main event tomorrows NFP we will likely balance out awaiting any fresh impetus it may give. It could be another scalp the range day:). Levels R1 - 12800 - 12820 R2 - 12920 - 12940 R3 - 13055 - 13080 S1 - 12450 - 12475 S2 - 12395 - 12415 S3 - 12290 - 12310 S4 - 12120 - 12140 ​ Buy Set Ups As noted above we are still looking at higher prices given the pa so any dips are first on the agenda. The first clear one is to re buy yesterdays low zone at 12450 - 75 or a possible gap close at pcc. A dip below 12450 to 12395 could be another opportunity. An alternative scenario would be to watch for any moves higher and look for pullbacks to above zones and or ref levels (the open level and or fibs.) ​ Sell Set Ups Shorts are not my first thoughts for today but clearly as pa unfolds we can take any good scalp opps that set up. A push up to R2 or slightly lower at the 61.8 Fib may afford a decent short opp. also look for signs of exhaustion at higher prices (rounding out type pa) as we could get a decent pullback at any time. The US


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Pretty much the same analysis as above for Dax. We are attempting a relief rally, have regained the 3700 / 3720 key S level and are looking for continuation. NFP tomorrow uis the key for the US

Summary

As I wrote yesterday we are clearly staging a relief rally in a bear market. Nothing has changed on the macro front albeit some initial signs of good news with US ISM pmi on Monday. How far we have to go given the past few days since then looks to be highly dependent of the NFP print tomorrow. Our plans have been very accurate so far (apart from my Covid wipe out day on Tuesday lol ) and our zones and levels have provided us with great way markers. No reason to change our MO. We go with what we have marked up, watch pa and trade the chart in front of us.

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RTH Post Session Review


Not an inspiring days pa with a slow grind down from the open. There was a possible short from the underside of the open / pml but not a straightforward pullback type entry. We did however get our planned long from S1 which was good for 50 / 60 pts and another possible scalp short entry from an intraday "double top" at the underside of the 12535 - 228 zone as marked up prior to the open. Overall not much on offer after two trend days to start the week but no surprise given the weight being given to tomorrows NFP. ​ Dax40. Friday 07 10 2022. Pre RTH Kick Off Notes



Premkt range is @ 75 pts as I write after a gap down open into our 12395 - 12415 S zone which is now filled. Data We have German Retails Sales at 8.00am CET, however, the marquee event today is US NFP at 2.30pm as we have been saying all week. All eyes are on this mths jobs data to see if the US rate hikes are having any effect on the labour market. Overview As noted NFP today carries more weight than usual due to the Feds focus on the jobs number in relation to cooling off the still strong US jobs market. In very broad terms inflation is fueled from two end - demand and supply. The supply bottlenecks caused by the pandemic and the energy price rise caused mainly by the war in Ukraine and subsequent supply shortages have pushed up supply side prices and hence inflation. The impact of the war is being felt more in Europe than the US and elsewhere but the knock on effects remain important for the whole global economy which is struggling with inflation. From the demand side the strong economic response out of the pandemic has pushed up demand ( more so in the US than elsewhere) which is chasing too little supply which has also put pressure on prices from the demand side. The Fed is therefore looking for a slowing down in jobs growth to give an indication that demand led inflationary pressure may be easing. Therefore any miss on the jobs number will be welcomed by the Fed as an indication their tightening / restrictive monetary policies are working. If the jobs data comes in over expectations it will have the opposite effect. Consequently we can expect any miss to add to the upward momentum primarily on US indices prices in this relief rally and downward pressure on a beat. what happens in the US as ever greatly influences what we get in Europe and the Dax - at least initially. That's the economics 101 broad view. For today then it will likely be a day of two halves, pre and post the US data print. What usually happens when we have a much awaited data event is that prices tend to park at a good S or R zone prior to the print with perhaps some choppy action beforehand. That is my working premise for today. Todays Trade Plan I have less of a feel for Dax moves prior to the NFP data so will go with unfolding pa at the levels we have on our charts though will be more inclined to sell any rips than buy dips in the first instance. I doubt we will get any break out move over yesterdays highs at 12700 prior to the data but we could get a push down to 12300 or lower to 12120 - 140 as a decent S level to park price prior to the announcement. Personally I will scalp what we get prior to the data and follow the action post the event. As always we have good S&R to act as our guide and that remains the same for today - our levels and plans have worked very well again this week. Once we get the data out of the way we will get a better indication of whether this bear market relief rally has more to go or its run its course. NB: we have "cash hole" on the Dax index and a gap at 12215 which could attract some downward price moves. Also note the halfback of the move up at @12250-60. Levels R1 - 12600 - 12620 R2 - 12695 - 12720 R3 - 12800 - 12820 R4 - 12920 - 12940 S1 - 12290 - 12310 S2 - 12120 - 12140 S3 - 11860 - 11880 S4 - 11780 - 11810 Buy Set Ups As today is all about the data I don't have any clear buy or sell set ups until we know the outcome. As said above I will play the pa prior to and post the event. It seems to me to be very binary today and all rests on the print at 2.30 CET. ​ ​ Sell Set Ups As today is all about the data I don't have any clear buy or sell set ups until we know the outcome. As said above i will play the pa prior to and post the event. It seems to me to be very binary today and all rests on the print at 2.30 CET. The US

Pretty much the same analysis as above for Dax. We are attempting a relief rally, have regained the 3700 / 3720 key S level and are looking for continuation. NFP tomorrow uis the key for the US Summary As I wrote yesterday we are clearly staging a relief rally in a bear market. Nothing has changed on the macro front albeit some initial signs of good news with US ISM pmi on Monday. How far we have to go given the past few days since then looks to be highly dependent of the NFP print tomorrow. Our plans have been very accurate so far (apart from my Covid wipe out day on Tuesday lol ) and our zones and levels have provided us with great way markers. No reason to change our MO. We go with what we have marked up, watch pa and trade the chart in front of us. ​ ​ RTH Post Session Review

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Not an inspiring days pa with a slow grind down from the open. There was a possible short from the underside of the open / pml but not a straightforward pullback type entry. We did however get our planned long from S1 which was good for 50 / 60 pts and another possible scalp short entry from an intraday "double top" at the underside of the 12535 - 228 zone as marked up prior to the open. Overall not much on offer after two trend days to start the week but no surprise given the weight being given to tomorrows NFP. The US

After the two massive trend days on Monday and Tuesday we have had more off a cooling off in the past two days. There is not much to say that I´ve not already said above i.e. we are data dependent today. What happens on the S&P post the data will drive what we get on the Dax and elsewhere. ​ Summary I guess I don't really need to say it again - but we wait for the data to get a better read and act accordingly - its really that simple in my mind and that how I will trade the day. The one thing I would say is that make sure you are not caught wrong sided into the data - the volatility is set to spike significantly in the imminent lead up and announcement. ​ ​ RTH Post Session Review

As per my notes above it was definitely a game of two halves today. During the morning session we had a few scalp entries from regular set ups as noted on the chart above. A couple were harder to catch but two, the gap close fade and the pmh fade were fairly standard repetitive set ups that could have netted 50 + points prior to the data. Not much but worth having nevertheless. Once the data came in showing no sign of any cooling in the lab market (and in particular the Fed will have not liked the drop in the unemployment rate from 3.7% to 3.5%) it was a question of jumping on the 1st pullback of the downswing on the event (always the first trade attempt on any big spike move) which came at the 50% of the immediate drop and at the open level price. NB: there was an even better entry on a higher pullback on the M1 chart which came nearly all the way back to the top. Once in on this pullback trade wherever you managed to jump in (if you managed to catch it) it was a question of trade management as it dropped 200 points into the US close. The upshot of the data is that traders are now questioning whether this relief rally has any ability to go higher after the near vertical down day in the US. Next week we have US CPI on Thursday which will give us more indication. This week was a volatile week and a good one from our levels and plans. I suspect next will be the same. Good times for day traders :).



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