Dax40. Monday 26 09 2022. Pre RTH Kick Off Notes
Data We have German Ifo at 10 CET and Lagarde speaking at 3pm. Overview Overnight pa has tested Fridays low at 12180 as I write having tested our 12317 - 12338 initially. Friday we made an important break of a critical HTF support level. 12400 has held the lows since Nov 2020 and Dax now has no "clean" D1 supports until we get down to around 11400 with a couple of better supports at @ 11800 and 11500. This whole area down to 11400 /500 is a fast area in that if price continues to fall it has little to stop it moving a long way quickly with nothing in its way. Its no surprise that Fridays drop held where it did at @ 12200 (12180 was the LOD) as that was both the first slightly better D1 S area and the halfback of the major swing from the Covid lows at 8000 to the ATH at @ 16500. See above chart. As the leg from 11400 to 12400 (and above) is pretty much a fast paced V shaped reversal pattern when we look left back to 2020 it will likely give us a good deal of intraday volatility as it trades this wide area on the hourly charts as, similar to the D1, we have no good levels until we get down to the bottom around 11400 / 500. As said we have 11800 on the way and if we trade here I´ll be looking for a an initial bounce / cool off. I have set H1 levels as per normal but we have to be ready for some fast and "wicky" price action until we either test lower to 11800 and below, build some structure as we go, or attempt to break back up over 12400. Also note the measured move chart and the Dax v Spx comparison for added information. The US also continued to press lower Friday with the DJIA breaking below its yearly lows and S&P and Nasdaq getting very close to their years lows at 3635 and 11050 respectively. Given the bearish picture, for today I will be looking for short opportunities in the first instance. Price action and the LH´s and LL´s sequence has the the full weight of the bears behind it and nothing to suggest any bullish pressure. The first thing to watch for if we try to move up is a retest of the 12400 HTF level. It will be a 1st test short for me if we retest hoping to ride it lower. If we break over 12400 I´ll be watching for real or false break pa of this level (see my book for price action examples). Breaking over 12400 and then over our R1 zone 12450 - 12475 is the least bulls need to do to get any upside momentum. If this happens (low odds imo) I´ll be looking for retest long scalps from any dips back to 12400 / 12450 bearing in mind shorts firmly hold the better odds right now so I´ll be quick to not overstay my welcome if I take any. On the downside we have the Friday low at 12180. Breaking below the 12180 - 200 zone for today and holding below brings up lower levels S1 and S2 for today. S3 is the better lower support area at 11800. My plan for today is to be looking for short trades to get on board the bigger picture downward trend towards better lower levels - 11800 in the first instance. I will take a 1st test short at any move back up the 12400 break down zone and also watch the 12317 - 340 zone as we go for any failure / rejection here also for short opportunities. If we break below 12180 - 200 I will then be looking for tests from the underside for shorts. I will trade the pa between 12180 and 12400 if we consolidate as it unfolds. The better odds are on shorts for today. Levels R1 - 12385 - 12400 R2 - 12450 - 12475 R3 - 12535 - 12558 R4 - 12600 - 12620 S1 - 12080 - 12100 S2 - 11970 - 12000 S3 - 11780 - 11810 Bullish scenarios As above longs have lesser odds today and only from better support levels as noted or any any moves back over 12400 which shows acceptance back above this break down level. Bearish Scenarios Any moves back up to test 12400 are first test shorts. If we break under Fridays low at 12180 any moves from the underside are short opportunities on first tests. Clearly the bears are in charge so we need to be watching pa for other intraday short opps.
The 3635 yearly low is in sight and will likely provide some bounce initially. Todays US RTH will be an important session. Summary Short side opportunities offer better odds clearly from price action and Fridays break out below 12400. Any move to retest 12400 is a short. As I said above my ".. plan for today is to be looking for short trades to get on board the bigger picture downward trend towards better lower levels - 11800 in the first instance. I will take a 1st test short at any move back up the 12400 break down zone and also watch the 12317 - 340 zone as we go for any failure / rejection here also for short opportunities. If we break below 12180 - 200 I will then be looking for tests from the underside for shorts. I will trade the pa between 12180 and 12400 if we consolidate as it unfolds. The better odds are on shorts for today. RTH Post Session Review
As per one option from my kick off notes we got a consolidation day between 12180 and just short of 12400 after making new yearly lows as RTH traders digested the move. This set up some good edge to edge trades as shown in the chart above - all at the levels discussed. If you took them there was plenty of opportunity for some decent points to be had. Personally I had an "interrupted" day having to sort out another sort of failed break down - my wife´s car. Some days things don't always go to plan :).
Dax40. Tuesday 27 09 2022. Pre RTH Kick Off Notes As I write we are still holding the same range as yesterday but within a very tight overnight range of around 60 points. We are prepping for a move. We had a small futs gap up which has been filled. Our 12200 zone and the 12400 zones still holding the upside and downside.
Data Nothing of any great importance slated for the wires today. As ever be aware of any unscheduled news. Overview As yet we have made no attempts at either breaking lower or at moving back into ´this years´ range above 12400. Consequently we can leave our levels and zones as they were for yesterday - with a slight change of our minor zone around 12350 which saw only H1 wicks above yesterday. Similarly much of what I said yesterday remains the same for today. We have 3 basic scenarios.
We test our 12400 R1 zone and fail or break back up into the range above
We break lower under 12180 - 12200 hold below and test lower
Or we stay as we did yesterday, range bound between these key levels.
From the tight overnight range it looks like we will get a move one way or the other today. In the US the S&P held its lows around 3640 on the index. We need to be aware of what happens this afternoon in the US session as it could push Dax into a more directional move - if it has not already done so in the European morning session. The US is prone to fast short cover rallies and no doubt the same will happen again. However that could spark from any point and its a novice game to try and predict bottoms. It might be today after 5 straight D1 red candles on S&P - or not. Better to play what we see. The amount of money lost by traders trying to preempt a bottom or top is probably the area where more has been "wasted" than in any other method of trading. Nothing has changed from a macro perspective. We are bearish so the better odds trades remain as shorts but longs from good Supports and lower range edges can still provide good opportunity as they did yesterday. Moreover we need to watch for any short cover pa as if this does kick in, it could open up a very sharp move back to higher levels. We know Dax likes to catch traders out when the obvious pressure is one way, so be mindful of this and not get wrong footed thinking only of shorts when a counter move long is clearing out short stops! Levels R1 - 12385 - 12400 R2 - 12450 - 12475 R3 - 12535 - 12558 R4 - 12600 - 12620 NB: watch Yesterdays RTH High S1 - 12080 - 12100 S2 - 11970 - 12000 S3 - 11780 - 11810 Bullish scenarios Its either long from below at the 12180 - 200 zone or longs from a break and hold pa set up over 12400. Everything else is range trading between these two key zones until we get some follow through. If we break lower I´d be looking at S1 and S2 for any long set ups. Bearish Scenarios As you might expect shorts are pretty much the inverse of our bullish scenarios. Its either short from above at 12400 (or higher if we do break upwards) or shorts below 12180 to test lower supports. At risk of repeating myself - everything else is range trading between these two key zones until any follow through.
As mentioned above SPX is holding at 3640. We have clear levels above and any move up to clear and hold 3720 would be the first good R level that needs to be re taken before any further short cover rally could initiate. to the downside 3590 would be the next better Support. Plan Summary We are range bound from yesterday waiting for the next move. Overnight narrow range pa suggests we are getting ready for a better move one way or other today. Until we get any follow through we wont know where the next leg is headed for. We have no data to act as a catalyst today. As a result of the above, my trade plan for today remains much as yesterday. I´ll still take a 1st test short of R1 at 12400 and watch for break or false break set ups around this zone. If we break, hold above and move higher I´ll be looking for pullbacks to get on board at least initially until we reach up to better R levels to look for exhaustion and shorts again. If I´m wrong on the 1st test short that's fine as it is a good risk reward set up whichever way you look at it. I´ll be looking for any breaks below 12180 to short on any retest from the underside or play the range as per yesterday. I´ll also keep a close eye on whether we get a marginal lower low below 12180 as this could be a good place to provide a fast spring back up the price ladder. Its a pretty clear plan until we get some follow through either way. RTH Post Session Review
Chart above marked up with notes (don't know how the line about me not being here got duplicated - I need a sub editor lol). Key point is we planned the best trade of the day - short 400 and had a good idea of what to expect from range day scenario. If that was all we took it was easily enough to have had a great day. If the 12180 break down had come earlier I suspect we may have got a retest opp but as it was a late day break - watch out for tomorrow!
Dax40. Weds 28 09 2022. Pre RTH Kick Off Notes As mentioned I´m not around today or the rest of this week - no morning kick off notes till Monday 3rd Oct. (however I´ve posted a couple of charts and a quick comment below)
Overview (Quick one) Dax yesterday lost the 12180 Support we´d been watching, pushed down into our S2 12000 zone and made an attempt at a bounce into the US close. We had a futs gap up only for it to be closed quickly and for further downside to test below yesterdays low overnight. Similar situation in the S&P. Nothing bullish and we have 6 red D1 candles on S&P as it also pushes into 2020 prices. The one thing in my mind is that at some point we could / will get a sharp short cover rally breaking this sequence both in the US and in the Dax. Bear this in mind in the next few days. For now though, technically, the weight is on the downside. On Dax this could take us down to 11800 as the next better S level and below to 11600 and the swing low from Nov 2020 at around 11350 - 400. Note the measured move chart I´ve posted a few times already - we are moving to its logical conclusion at around 11600. I've posted a downside levels chart above for info. Watch for breaks, false breaks and pullbacks. Stick to the levels and zones the pa around them and keep an eye on the US. Good luck as it looks like we could get some good moves into the end of the week.