Updated: Sep 18
Dax40. Monday 12 09 2022. Pre RTH Kick Off Notes
Overview Gap up open on futures above 13050 which can usually be our first level to watch for a close of this gap. All of the push above 13030 which was our key level Friday and held the upside occurred in the gap-up pre market session and S1 13030 - 50 remains an important zone for today. We have tested the cash 50DMA level in pre mkt and this also will be important in the RTH. Usually gaps in futs above key levels and ref points are tested in the RTH and also note we are @100 points up on the Friday pcc (previous cash close) so watch for an inventory correction once the RTH opens. Dax is testing higher and S1 and S2 will be key levels to watch/hold to see if this is sustainable. Similarly R2 is a key R / target further up with R3 being a strong R and likely to initiate a bounce back down. Also note the rounded bottom of this pattern which is text book 101 supportive of this move up - remember the inverse Head and shoulders I posted last week. From a macro stand point nothing has changed. Rates are heading up, inflation mounting, gas is Europe remains a critical concern and there has been continued discussion of a recession in Germany / the Eurozone. I re-tweeted yesterday a comment on 1 - 3 month Options with strikes 10% below current levels trading at their highest level this year compared to similar Euro Stoxx Options (Bloomberg) and I also read some data on Eurozone equity fund outflows. Neither of these two data comments are particularly important for us as day traders but worth noting for "colour" - the macro picture remains bearish going forward. However technically we appear to be catching a thermal spiral from the US and possibly catching out some weaker longer term "short" hands as we push higher in this rally. (Its often the case that when the fundamental landscape looks bright or dark contrarian traders tip the charts on their head and kick off a counter intuitive reaction. Funny old game this trading lark lol). With the S&P over its 50DMA, Dax can continue to push up to 13330/80 where some stronger R comes in on the D1 chart - our R3 zone for today would be an automatic fade (for me) on a 1st test. The Key data for this week is US CPI´s tomorrow (more on this tomorrow). Levels R1 - 13220 - 13240 R2 - 13330 - 13350 R3 - 13455 - 13475 NB: note minor R zones particularly 13370 - 385 S1 - 13035 - 13060 S2 - 12930 - 12950 S3 - 12866 - 12885 S4 - 12705 - 12730 NB: 13130 - 13150 remains a key zone Bullish scenarios We have a @500 point almost straight push since last Thursdays lows and Dax could easily retrace some and still remain technically bullish. Holding above and acceptance of our immediate S zone after the open of 13130 - 13150 and the gap up looks very bullish. The first important downside which needs to hold would be S1. The halfback of this move from Thursday lows comes in around our S2 zone for today - a retest bounce and hold here would still continue to support higher prices. Bearish Scenarios Quickly closing the gap up and moving under 13030 and down to S1 with no pause / bounce at pcc could start to pressure further momentum up the charts. Breaking S1 and holding under would be a bad sign for Bulls as we would be back inside the majority of last weeks range. Alternatively a fast push up from the open to R1 and particularly R2 with signs of rejection here could suggest we have capped out on this up leg and we could see a bigger retrace but any move up here and only back to 13150 ish keeps the Bulls in charge. We need to watch tempo and momentum for clues. The US
The S&P has broken the 50DMA to the upside with 3 strong green days at the end of last week. A back test to the 4035 mark (the 50DMA) would be logical and we can then see what happens. Tomorrows CPI print will be carefully watched for clues as to any reduction/increase in the pace of US inflation in the run up to the FOMC on the 21st Sept the key event into the month end. Summary We are clearly pressing higher and until we see some signs of this move becoming exhausted or our key S zones being broken and holding under, this has to be our working context. Look for pullback type entries especially to S1 and S2 in the first instance for fade opportunities. Similarly moves up to R2 look like good 1st test fade opportunities and certainly R3. As ever, and you know my mantra by now, watch the pa evolve, its tempo and shape, and wait for our H1 zones to be tested and pa at them for the better odds entries. We need to be looking for 1st test fades, breaks and false breaks - all in my book. If you are scalp minded there will be plenty of trades as we unfold during the day on the M1 and M5 time frames. RTH Post Session Review
As per above RTH close chart the money was all on the long side today. The best trade / entry was for fast acting S1 dip buyers who had 300 pts to play with as mentioned in kick off notes. If you weren't on board we had a day a bit like Friday where we had some intraday pa forming shelfs to jump on and some good entries of broken R zones. All in all it was a fairly straightforward BTD day up to the D1 R and our R3 for today at around 13450 where we got an expected pullback (although a little front run) again as noted in the kick odd briefing above. I had a so /so day tbh - was not on my game as I should have been. I had a loser short fade from R2 (no problem with that) but I made some "green" on the day just not as much as I should have - been half asleep - need more coffee obvs lol! Hope you all had a great day, and, as ever - we´ll be back raring to smash it again tomorrow :) Dax40. Tuesday 13 09 2022. Pre RTH Kick Off Notes
Overview We have had a 750 point up move since last Thursdays lows with little by way of any decent pullback - one way traffic only. We tagged the D1 R zone at 13450 yesterday and again overnight with a slightly marginally HH. This is all technical trading as we have had no macro catalyst to induce the bullish move. It seems to be short covering relief and largely following the US. The thing we need to guard against is this could snap at any time with any negative headline news - maybe gas related - although such news loses its impact the more time this particular card is played. We have US CPI´s out this afternoon which are eagerly awaited by US traders to get an idea of the Feds move next week. Any print which comes in higher than expected could dampen spirits and send us back down this strong up leg. Any lower print than expected will likely help support the move and we could move further up. Regrading S&R it is slightly more complex than of late because H1 structure is extended in this leg up and there are a number of areas we could pullback to which could form a S base. On the way down we have 2 cash gaps above the 12750 base of this move and better structural S zones at S1 and S2. We also have the cash 50DMA at 13200 for today. Worth noting that the 38% Fib of this leg sits at just below the DMA50 and on our S1 zone, the halfback just above S2. Above the R1 zone at 13450 we have 2 further cash gaps. My plan today is watch for any pa which moves over 13450 R1 - if it holds above and forms a base further extension upwards is likely. If R1 is tested again in the RTH and rejects quickly we need to be watching the tempo for any faster move down / retrace to better S levels where it will likely pause to re assess. I suspect we may form a holding pattern after the 1 to 2 hours or so of the RTH waiting for the US data and the impact across the pond. However, this is a strong move and we can only work with what we see and what we see is bullish pa so pullbacks to get on board have to be our initial scenario. Any pa which suggests otherwise will help us form a clearer view. Our better S & R zones are our guide and along with unfolding pa we can take our shots. Adaptability and flexibility are top of my mind for today. It could be a day of 2 halves re the Data. Levels R1 - 13455 - 13475 R2 - 13615 - 13635 R3 - 13820 - 13840 NB: note minor R zones/single levels and cash gaps S1 - 13140 - 13160 S2 - 13040 - 13060 S3 - 12930 - 12950 S4 - 12705 - 12730 Bullish scenarios It seems clear that we need a break and hold above R1 for any further move up the charts. Any RTH failure here or just above and we could move lower quickly. We may then form a base at better S before a further attempt is made. Bearing in the important US data, any more bullish animal spirits across the water could inspire Dax higher. Bearish Scenarios In line with what I´ve said above any fast move to R1 maybe a break over the zone and a fast paced rejection could be the tell for today particularly given the (over) extended move up we have had. A retrace has to be in our minds maybe back to the 50DMA and or S1. We are a little over extended also on H4 RSI. The US
The US has made a strong move in this rally and is clearly providing some impetus for Dax. We have pushed over the halfback on the D1 S&P and the 50DMA is around 80 points lower. The key for the S&P and US markets for today is the data in the run up to the FOMC next Weds. Summary It could be a day of two halves (re data) or we could get either a strong push up or down given the price levels we are at right now. I am not trying to equivocate it is simply that we are close to a pivotal level for Dax at 13450 and a break or rejection seem equally valid to me and will set the tone for where next. The bulls case rest on moving over this level and the bears to hold and reject it. Behind us we have strong bullish pa so that's top of mind as a change in direction needs some bear power but the fact we are extended gives bulls time to pause and retrace to base and build for any further attempt up the charts. Given this, evolving pa is our best measure of what might happen and where our better trades will be. Real time market generated data through price action is key for today. RTH Post Session Review
As we expected it was a game of two halves pre and post data. Before the data the moves were perhaps a little less certain but nevertheless there were some regular day trade set ups. We could have shorted the 1st test of the HTF 13450 R1 at the open and then taken a long shot at pcc for a typical gap trade. After that price ranged until we got a break out attempt over the R1 HTF level where we had a chance to jump in long on a retest back to the level which was a more comfortable trade for many I would suspect. The key to the morning pre data session was to trade only at know levels and ref points as is always the case and to not stick around waiting for any big move. Post US CPI if you were not already short it was a case of waiting for a pullback on the news smack down which came right at a pullback to the open level. Once in there you could ride it down to the close. We did get another opportunity at 13322 a level noted in the morning kick off. So some regular type scalp trades pre the data and a typical pullback trade post the data. All repetitive type trades for day traders and noted many times here. Dax40. Wednesday 14 09 2022. Pre RTH Kick Off Notes
Overview I mentioned in yesterdays kick off notes that price up at the 13450 was at a pivotal level and so it proved. It was either going to break or fail and we got the latter as an attempt to break out over it was shot down on the US CPI data print. Up the stairs and down the elevator is normally what we get when price is climbing a wall or worry in a bear market rally. One negative catalyst sends prices tumbling back down. And it was pretty negative. This is not so surprising though as nothing has changed from a macro perspective as I have been saying nearly everyday for the past couple of weeks. A short cover rally in bearish negative conditions can always unfold quickly. As day traders we watch our levels and act in line with the days price action but we are always mindful of the bigger picture. We take our long shots and we take our shorts when price tells us to. All from known levels and reference points. So far we have retraced 500+ points in Dax since the data print and shown no signs of much of a pullback either in Dax or in any of the US indices. The DJI put in a 1650 point fall in what was a very ugly day for all indices slicing through all supports in a one way show of bear strength. Next weeks FOMC is now the key event for what happens next. We could still rally as Oct through to year end is typically a good qtr. for stocks but with talk of a 100bps hike now on the table in the US we are going to have to have something to trigger any lasting move back up. For Dax as we come into the Autumn / Winter period energy concerns must be top of mind along with possible recession, inflation and ECB rates moves. We are not very well placed macro wise to support a strong push back up. But things can change quickly and our job as day traders is simply to trade what we see everyday. So whether it goes up, down or sideways it matters not to us. We are not investors or analysts we are traders. We mark up our charts at the better odds set up levels, read and watch pa and act. That's it we don't ever need to climb any wall of worry or lose sleep on violent down moves - we just take what's on offer and sleep easily :). For today we have some good levels which have been on our charts for a while now to the downside and we have a better reference of levels to the upside. As I write we are at the 50% of the swing from the lows at @ 12600 to yesterdays high. We are back below the 50DMA and at our first S level for today at @ 13050 a broken R now acting as S. Not much of a bounce so far but the RTH provide us more clues. The first thing to watch is will this hold. Any move under and holding will bring in lower levels particularly 12950 which offers the next decent S level. Below here 12750 and 12600 provide better support. A stronger bounce from 13050 (we know that news has a tendency to be retraced) could bring in the 50DMA at 13210 ish which would not be that unusual. To get there we need to move through 13135 - 13160 which gave us the break out on Monday. No key data today other than US PPI which may either add weight to the fall in prices or if it comes in less hot or much better than expectations provide a bit of stimulus or at least stem the flow. It is less important that CPI. Levels R1 - 13200 - 13228 R2 - 13270 - 13290 R3 - 13350 - 13380 R4 - 13450 - 13475 NB: note pcc at 188 and DMA50 at 212 - a cluster around R1 S1 - 13047 - 13067 S2 - 12930 - 12950 S3 - 12705 - 12730 NB: note minor zones Bullish scenarios The 50DMA can act as one line in the sand for today. Any move up and over and holding could support another drive up the charts. Similarly a dip under todays S1 which would be another line in the sand and a move back over could do the same. Bearish Scenarios After yesterday we clearly need to be thinking in bearish mode and watching for any further breaks lower. A move up to 13160 and quickly falling adds impetus to more downside. Similarly breaking under S1 at the open and holding below would be negative pa for prices. The US
The CPI print has dampened any further animal spirits across the pond for now. The S&P has the rising TL below which could hold any further fall. If it breaks under that negates this pattern and moves down to 3790 and lower could be incoming. Summary We are in bearish mode for today. Unless pa shows us any real strength my plan is to be looking for up moves to get on board short. Until I see anything which alters that view that is my working scenario. As always though we need to watch the tape for clues and act appropriately. Flexibility of mind, staying adaptable to what we get and taking our shots in line with pa inevitably overrides any working bias. That's what day trading is as I´ve said above. We have good levels where we know price is likely to react and have a framework to guide us - that's all we need. Have a great session compadres. RTH Post Session Review
From above - ".. We are in bearish mode for today. Unless pa shows us any real strength my plan is to be looking for up moves to get on board short. Until I see anything which alters that view that is my working scenario.." and so it proved. Some regular day trades entries from levels and usual reference points such as open level and pcc (previous cash close). The chart above says it all so there's not much for me to add. The key to day trading like this is: To have good levels and ref points To have your charts ready and clearly marked up To have a scenario and flexible mindset (as per my book) To understand price action (bit more down to you) To take action (all down to you) You don´t need all of the entries I note everyday, 1 or 2 will suffice. I don't catch all of them, and I lose like everyone else but that's trading. As I say right at the end of the psychology and mindset section on my book "Trust your charts, Trust your eyes, Trust yourself. Trade with confidence because it will make all the difference!" More of the same tomorrow:). Dax40. Thursday 15 09 2022. Pre RTH Kick Off Notes
Overview After the big dip on Tuesday, yesterday we got what we usually get after such a push, a consolidation day with a slight negative bias bouncing between our R zone at the top just below the 50DMA and our 12950 S zone below. We could get more of the same today while price bases itself ready for another leg either up or down. We have a big range between 12600 and 13550 which can be visibly split in two around the 13050 level. Either range could attract price to test higher or lower but I suspect we may wait for any clear indication of any attempt outside of the wider range until the FOMC next Wednesday. This gives us plenty to work with and no doubt we will get some good set ups and opportunity today and in the next few days before then. Overnight we have a tight range as I write sitting around 13050, clearly a key inflection point for where we go next. We have a tightening triangle formed from Y Highs and Lows which will give way either up or down around this pivot. No macro changes and we have US Retail Sales data as the main news for the day at 2.30 CET. The S&P put in a slight bounce yesterday to form a green D1 after the drama of Tuesdays big drop which was the biggest red day since March 2020. A move looks to be setting up with S1 and R1 as the two key levels which needed to be taken out for any further up or downside. Note Y RTH High on your charts and the 50 DMA. Also note pa @ 13000 and 13100 levels which held prices in the extended session after yesterdays cash close. Levels R1 - 13150 - 13175 R2 - 13280 - 13300 R3 - 13450 - 13475 NB: note minor levels in between S1 - 12930 - 12950 S2 - 12705 - 12730 S3 - 12600 - 12620 NB: note minor zones & cash gap at 12904 Bullish scenarios As said above we are forming a tight range waiting for a move up or down. The 50DMA will be critical for any extension higher and any tests and hold above would be bullish. It would have to clear R1 first and we can also use this zone as an indication of strength or otherwise. Breaking and holding above R1 sets up a test on the 50DMA and higher zones. Similarly a dip to S1 holding either as a direct fade or a false break and a faster push back up signals a reluctance for lower and any further tests on 600 - for now. Bearish Scenarios A break below S1 is the first hurdle for bears. A push down, breaking and holding below signals lower levels. Similarly a test of R1 and a fast rejection keeps the bears case in tact. While we coil around the 13050 "pivot" level neither camp has the edge from a technical standpoint although from a bigger picture perspective we are in a bear market. We will have to read what happens in real time but we do have very clear levels and inflection points for today that will give us a good reference for either higher or lower - i.e. R1 & S1. The US
It is a similar picture in the US with price consolidating yesterday. The bears need to take out the rising TL on the S&P to gather any momentum for lower and need to clear 4000 for any clearer indication of upside. Summary We are coiling waiting for a move which will likely need a catalyst to kick off the next leg higher or lower. We have very clear levels and zones to work with on Dax with R1 and S1 being the two key areas as I write prior to todays RTH kick off. What happens at either of these areas will give us a much better read as to where we might be headed. For day trading the session keep an eye on the levels, look out for breaks, false breaks and pullback patterns and for scalps look out for floor and roof type patterns noted in the Set Ups page. Also watch out for pa around 13100 and 13000 which formed a range high and low in the afterhours session yesterday. RTH Post Session Review
From the kick off notes above we had R1 and S1 on our radar and the Ref levels 13100 and 13000. We also noted the range split at around 13050 (pivot area). All of these levels and zones acted to provide us with good set ups and trades for today. We didn't need anything else. You don't need them all just 1 or 2 to make a massive difference to your performance. I´ve marked up the chart above to note the entries and reasons so I´ll leave it at that. Trust you had a good day compadres :). Dax40. Friday 16 09 2022. Pre RTH Kick Off Notes
Overview Gap down overnight and tight ranged following the key support break down in the S&P futures. I wrote yesterday we could split the bigger range from 12600 at the bottom to around 13600 at the top into two distinct ranges pivoting around the 13050 level todays R1. We are now testing below 13050 into the lower range. We have 2 good support levels below us @ 12710 and 12600 todays S1 and S2. Below here, should we break, we are getting close to the critical 12400 level which has held since Nov 2020. The first thing to watch for is a futures gap close back up to @ 12930. We have pcc at 12956 just above and a cash gap still to be filled in the RTH session at 12904. This area is important as we open in the RTH. No attempt at a futs gap close or any inventory correction back up to pcc would be very bearish and suggest we are heading lower. A gap close and holding above pcc could bring in a test of the pivot / range split level at 13050 - 70. NB: overnight pa can often be unreliable so while we look very bearish as I write we need to be alert to any changes as RTH participants come in. We have no key data for Europe today and UoMich at 4pm CET in the US session. Feds Powell has indicated in the past that the UoM data is important to the Fed so watch out for any reaction here. NB: It is Quad Witching today. From Investopedia:
Quadruple witching refers to a date on which derivatives of stock index futures, stock index options, stock options, and single stock futures expire simultaneously.
This event occurs once every quarter, on the third Friday of March, June, September, and December.
Quadruple witching days witness heavy trading volume partly because of the offsetting of existing futures and options contracts that are profitable.
Investors may take advantage of the increased volume and arbitrage opportunities that result from quadruple witching.
Quadruple witching does not necessarily translate to increased volatility in the markets.
I think the key today will be whether we can break back over and hold above the gap down level area and possibly test 13050. No attempt or failure here keeps prices looking for lower. We also need to keep a close eye on the S&P to see if this breakdown down under its ascending TL is real or false. Any attempt to close back up in the S&P will likely be followed by Dax. Further downside momentum in the US will also pressure any upside in Dax and we will see lower Supports being tested. Levels R1 - 13050 - 13070 R2 - 13150 - 13170 R3 - 13360 - 13380 NB: note minor levels in between. I have left a wide gap between R2 and R3 on the basis that if we see strong momentum upwards any break above R2 and in particular the 50DMA brings in a fast area with no better R zones until we reach R3. If we get strong bull movement I will update in real time. S1 - 12710 - 12730 S2 - 12600 - 12620 S3 - 12430 - 12455 NB: note minor zones and key spike low at 12690.Also note the important HTF 12400 level Bullish scenarios As said above any bullish momentum needs to close the Futs / overnight gap quickly, hold above and show some RTH pa strength It would have to clear R1 to suggest it has any real momentum. Bearish Scenarios From the pre market pa bears are in charge and will continue to be dominant if are not able to close the Futs gap. A futs gap close with no ability to push further is also negative for prices. Any momentum to the downside will bring in tests of our key S zones for today. The US
As mentioned the S&P broke its ascending trend line which has been the driver of this last weeks higher prices. Failure to break back over it opens up lower levels. Whether we get much lower depends on trader sentiment in the run up to next Weds FOMC where we will find out the latest rate hike number (50 / 75 or even 100 bps) and what's in the Feds mind going forward. What happens here in the US today will impact the Dax. Summary We are looking pretty bearish atm with lower tests seemingly on the cards in the coming days. Next weeks FOMC is critical in the path for the next few weeks and possibly into year end. However for day traders like me/you - all that is light years away. We just need to watch real time pa note our levels for where the better reactions will set up and take our intraday shots. We are always Flexible, Adaptable and Action Orientated. We don't care what might happen next week we are only concerned with today - that's our job! I know I say the same everyday in this regard but only because that's what I do everyday! I´m not interested in swing trades - they don't fit into the way I think about trading at all. One day is all we need to make money and having to think much further ahead than that proves counter productive - for me at least. I will write up my thoughts on this at some time :) RTH Post Session Review
The key for today was the failure from the open to close the futures gap. Once price showed weakness right after the RTH started our first trade attempt could have been to short on a pullback after the initial open drive. We got a pullback to the pml at 9.15 am which was also the 38% of a fib from the 8am high to the 12770 low formed from the open drive lower. Noting the overnight price action, our bearish read and the fact that pullbacks are regular set ups this was enough information to try and get on board. It was a good trade and pushed lower to S1 where we could have closed for around 70 points slightly front running our close above the S1 zone. After that we just needed to observe pa with a view to favoring any further short side trades in line with our bearish scenario. We could have tried a long from S1 as Support is Support until it is broken. Personally I didn't take this trade or any longs today. The other shorts were also pullback trades from fibs and from a later retest of the pml as per the notes in the above chart. The better odds trades were on the sell side today. I trust you had a good one :).