Dax40 Week Review 05 09 22 - 09 09 22

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Dax40. Monday 05 09 2022.


Pre RTH Kick Off Notes

Overview

First thing to observe is that futures opened with a straight push down to 12600 with only a shallow bounce and looks to be bear flagging. We have a futs gap between 12680 and 723. As I write we are around 450 down from Fridays cash close of 13050. Fridays Gazprom news weighs heavily on any upside.

FYI: Nord Stream 1 was already down to 20% of its pre "war" supply / gas flow capacity and full closure adds further pressure on supply, prices and inflation. Extended full closure of the pipeline doesn't bode well for any rally in Dax. I wrote about this here titled Winter is Coming. If this pressure continues, from a technical standpoint the D1 chart above left shows a TA "101" measured move down to 11600. However to get there we have to break 12400 - key S. Gas and the ECB rates mtg on Thursday (more nearer the time) looks set to keep a lid on higher levels. The Bear market has a bigger picture edge right now.

However a short cover rally could materialize at any time on the whiff of good news on gas supply. Markets are a discounting mechanism for traders/investors ideas on what's ahead and we need to be in synch with this. Some inventory correction could also be on the cards first off as RTH participants digest the move as could a retrace of this news driven move as they often tend to be retraced especially when made out of the RTH session. On the other hand, the US is on Labor Day holiday so Dax could use the lower liquidity to push lower. As always we need to hold opposing views, read the pa as it unfolds and be aware of any incoming news.

From the overnight pa so far lower levels look set to be tested and possibly breached either today or in the days ahead. 12600 is the first key S level we need to watch. 12400 is the key to lower prices last seen in 2020.

Levels

R1 - 12715 - 12733

R2 - 12825 - 12845

R3 - 12880 - 12900

NB: note minor R zones in between particularly 12800 and Fibs on any retrace.

S1 - 12600 - 12635*

S2 - 12530 - 12555

S3 - 12430 - 12456

S4 - 12386 - 12405**

NB: 12400 is the key low which needs to hold. Below here we are back to prices last seen in 2020.

Bullish scenarios

A break and hold above 12700 - 730 the futs open zone is the first hurdle for any upside. Similarly any fast push down to S2 12530 and or a test of 12500, holding and a bounce back up over 12600 could help support the upside scenario. Whichever way we look at it though it seems we need some good news to act as a catalyst higher.

Bearish Scenarios

A break below 12600 and holding below opens up lower levels and S zones down to 12400. Similarly any attempt to push higher, failure (Futs open first maybe) and fading will likely continue to build pressure to the downside and a 12400 retest which has been hit 3 times already so is weaker on any further test.

The US


US Labor day holiday today with shortened futs hours trading and NYSE remains closed. S&P reached up to its 50DMA Friday before backing off and retesting 3900 low zone with a slight bounce into the close. The 61.8 held as S for the time being. Note the TL below and the cash gap at 3790.

Summary

With the US closed, the ECB later in the week and a possible 75bps hike on the table, and gas supply shut down there is not much case to support any bullish pa from a macro standpoint. Technically we also look set to press down to 12400. Dax could use the lower liquidity today to push down further faster to 12400. However as day traders we watch the pa as it unfolds, use our real time read and zones as a guide and take our shots accordingly. Adaptability is always our our watchword!

RTH Post Session Review



After Fridays smack down on gas news, Dax defended the 12600 "gateway" low and staged a shallow bounce (as I write) to rectify some of that sharp news driven move. Given that the US was on holiday and consequent low liquidity the better moves came in the morning session. The thing to take away from today is that whatever the macro environment we always have opportunities to take trades from levels and zones that we had marked up before the kick off. Our S & R zones provided us with some decent trades as they always do. Combining your read of the chart as it unfolded gave us a couple of other opportunities along the way to either jump on board or trade as separate scalps.

As per the chart above the 1st opp came before the RTH at 8.00am where we wicked just below the over night low and pushed up all the way to R1. A typical "spring " trade. Maybe too early for some but its worth noting pa from this time as pre open volume kicks in and it often provides some good opportunities. The next was a short from R1 once it was tested by RTH participants and a long once it got down to S1 and pushed back over the top of the zone. If you only traded these two opportunities today it would have been a good day with around 150 to 200 points on offer. Just the RTH short gave us nearly 100 points. The third better odds trade was a short from 12780 - 800 R zone and the 38.2% pullback level of the Friday down move. Again this is a regular pullback set up - back up into Fridays range / structure and the 38.2. In between we had a couple of scalp trade opps from the opening price level - always worth noting on your chart.

In total while on the face of it it seemed a pretty quiet and slow day, taking trades from known levels and zones again paid off. I´ve said this many times but trading only from marked up good S & R is always a winning method and the way to trade Dax. Sure they don't work out 100% of the time but the odds are just far better from these areas. Taking pot shots in no mans land never works - or rarely.

We go again tomorrow compadres :).

Dax40. Tuesday 06 09 2022.


Overview

First thing to note is that we tagged the halfback of the Friday downswing in the overnight session at R1 12830 and backed off this zone down to around PCC (previous cash close) at 766. S1 for today is slightly amended to cover the 700 area where we formed an intraday base yesterday with only H1 wicks below from midday onwards. Look out for any dips into here as a 1st test long opportunity. Similarly any test back up the pmh (pre market high) at around 12830 in R1 is a good 1st test short opp.

We can take today as the first real day back after the summer period and yesterdays US Labour day holiday with more normal liquidity. No further news of any great importance on Gazprom hit the wires yesterday other than Putin made it clear that Western sanctions were to blame! We are still in news sensitive times so watch out for any unscheduled comments to spark rips and dips.

The ECB on Thursday is the key data for Dax this week where we will get either a 50 or 75 bps hike. Any comments on the likely rates path going forward will be the key outtake for traders. The macro picture remains bearish and in that case any move up towards 13000 seems unlikely. But ... and you know what I´m going to say ... we are day traders and we watch pa unfold and take our trades. Its a fast area all the way above 845 R1 with no H1 structure and short covering could always push us back up.

For today we have US ISM at 4.00 CET with no important Euro zone data.

The gateway to lower prices remains at 12600 which was defended yesterday for any push lower to retest 12400 the key HTF S.

Levels

R1 - 12825 - 12845

R2 - 12880 - 12900

R3 - 13030 - 13050

NB: note minor R zones and Fibs

S1 - 12700 - 12720

S2 - 12600 - 12620

S3 - 12530 - 12555

S4 - 12386 - 12405**

NB: 12400 is the key HTF low which needs to hold. Below here we are back to prices last seen in 2020.

Bullish scenarios

A break and hold above R1 825-845 would be the first indication of higher prices. It was the halfback of the Friday down leg and defended overnight. Look for acceptance above here for incoming higher levels. Any dip to S1 with either a false break or a fast rejection is also an indication that we could move higher.

Bearish scenarios

The H1 looks like its bear flagging. A break below S1 and holding below after retest from the underside opens up lower zones. Any push lower and certainly through 12600 with no fast rejection back up would be negative and indicate lower towards 12400 the key HTF support. Similarly watch for any initial push higher to R1 and rejection.

The US


Re-open today after Labour day holiday but the same applies as yesterday. The 61.8 and TL is holding the downside for now. Any break lower opens up lower prices first to 3880 and note the gap below at 3790. Lower prices on the S&P wont be positive for Dax particularly coming up to the Thursday rates decision. Any fast moves higher could support Dax up the charts.

Summary

We remain bearish from a macro perspective and September is seasonally usually the worst performing month of the year for stocks and indices. However what the overhead picture looks like is not that important for what happens intraday. Real time price action is all that matters so while we may hold a bearish mid to longer term view we need to also hold the opposing bullish view for day trading. Its not that one holds sway over the other its that from a mindset point of view its the reality of how we trade and make money. We always need to be thinking "what if" and "if this then that" at all times for short term moves and trades intraday. We need to be flexible in our thinking and adapt quickly to what unfolds during the day.

It also useful to think of Dax a more of a range play instrument as that's what it does most of the time. Subsequently unless we get any fast one way moves up or down indicating trend day pa we are much more likely to trade the local range waiting for a catalyst.

As ever our zones act as guides and way markers and what happens at them is what informs us to how we trade. Always be on the look out for 1st test fades, breaks and false breaks at the levels. It is simply the best indicator I know to stay on the right side of intraday price action and consequently day trades ands scalps.

Good luck and any questions either email me at mark@markwogan.com or DM me on Twitter.

RTH Post Session Review


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Todays pa was a lesson in pre set levels, watching and marking up pa as it unfolded in real time and having the confidence to act. We kicked off with a strong open drive higher up into R2 cutting straight through R1 and the pre mkt range high before turning lower from the R2 top level at 900. You may have had a loser fading a 1st test at R1 but fading R2 at the big fig 900 level was a better opportunity as soon as it cut back through the underside of the zone for a more conservative entry. You could have been cautious as I was with tight stops just above 900 but the short trade was a good winner especially as we saw it break back through R1 and retested this zone from the underside and again continue lower. You could see this better on the M1 charts.

It eventually fell back to the pcc which was also the open level, bounced once (and a good entry for aggressive scalpers), came back and retested from above and moved up again. The fact that it was pcc so a gap close and the open level were good enough reasons to be long there. There was also a TL more conservative traders could have used to jump on board.

Just these two trades were enough to have made 100 - 150 points! If you continued to trade there was only one other clearer opp which was after the 900 level had been cleaned out and we had a retrace back to the R1, PMH and the halfback - a good scalpers opportunity. After that the US assumed control and while there were a few scalp opps it was a more difficult read.

These types of whipsaw action can sometimes be difficult for traders as it had no clear direction or follow through and basically stayed range bound for the day. This type of pa requires a real time read and mark up along with our pre set levels but can nevertheless be good trading days if you have the confidence to take the opps as they arise.

Dax40. Wednesday 07 09 2022.



Overview

First thing to observe is the futures gap at 12800 just below R1 for today - a fill of this would be logical and a normal expectation. We moved down overnight after failing above R2 yesterday where we have pcc for today at 871. We could get further consolidation waiting for the ECB tomorrow or we could get an attempt to clean out the Friday smack down highs at 1300 - 13050 in readiness for the rates decision tomorrow. It seemed to me to be trying to do this yesterday. My normal plan of action coming into big data such as the ECB is to simply go with a real time read looking to act at pre set levels and zones based on the pa. The market is usually nervous of making any big decision until we have more info so like yesterday expect to watch, read, mark up as we go and take your opps as they arise - but always being guided by the better S&R zones for the better opportunities.

Levels

R1 - 12820 - 12840

R2 - 12895 - 12920

R3 - 13030 - 13050

NB: note minor R zones

S1 - 12600 - 12620

S2 - 12530 - 12555

S3 - 12430 - 12456

S4 - 12386 - 12405**

NB: 12400 is the key HTF low which needs to hold. Below here we are back to prices last seen in 2020.

Bullish scenarios

A break and hold above R1 820-840 would be the first indication of higher prices. It was the halfback of the Friday down leg. Look for acceptance above here for incoming higher levels. Any dip to S1 with either a false break or a fast rejection is also an indication that we could move higher.

Bearish scenarios

A break below the 700 S zone and holding below after retest from the underside opens up lower zones. Any push lower and certainly through 12600 with no fast rejection back up would be negative and indicate lower towards 12400 the key HTF support. Similarly watch for any initial push higher to R1 and rejection.

The US


The S&P failed to make any real move above the 61.8, TL and the 3900 level yesterday. We had similar indecisive whippy action as we did in Dax. It is also in wait mode for the Fed although this is a couple of weeks away on the 21st Sept so we could make a move before then. Generally we are seeing a sell the rip rather than buy the dip mode in play and with the bearish seasonality of Sept we could be in for a leg lower - none of which will help Dax make much of an up move.

Summary

We remain bearish bigger picture and in a holding pattern until the ECB tomorrow. The rate hike at either 50 or 75 bps and more importantly the comments from Lagarde as to the future rates path will be important for the next move on Dax. I expect today to be a range day again with an outside chance of a move to clear the highs of the gas news at 13000 - 13050. However, I´m not one to predict outside of the levels I mark up so will do as I always do - watch, read in real-time and act. Have a good one compadres :).

RTH Post Session Review