Overnight we had an interesting pullback on US Equities, which were at all time high’s only a few days back. With US Treasury yields it is normally seen as the risk-free rate for investing, so an increase tends to be negative for other asset classes including shares. A negative move on US Equities overnight is important, as most Equities Indices are positively correlated. This is because the US Equities market is the largest in the world, and it can affect the risk-on sentiment (Eg, buying activity) of other equities markets across the globe.

Market Movement

Today, the major Asian equities remained quite steady, signalling no major risk-off sentiment to head into the European session. In addition, there is no company earnings or dividend payments that could affect the DAX 30 to a wide extent. In addition, the EURUSD is important to assess because unhedged exporters on the DAX can increase their sales figures should the EUR become cheaper. The USA is the largest export market for Germany outside the EU nations, so its important to see if EURUSD will continue its slide south and and push the DAX 30 higher. At the moment the pair looks anchored at 1.15. So on that basis, I’m not expecting any of these fundamental factors to influence the DAX 30 today.

Today’s Expected News

More importantly though, we do have Germany Factory Orders m/m data being released during the open of pre-trade hour in Frankfurt, at 08:00am Central European Time. This is a relatively important lead measure for the large manufacturing segment in this market. A stronger than expected data should boost the DAX or lower it respectively if the data is lower than expectations. So please pay attention to this data announcement today.

Technical Analysis DAX30

For the pre-day technical analysis setups I require multi-timeframe reviews. First we look at higher TFs. On the Daily TF, we are moving into a breakout penant formation with a downtrend in place since 14 June 2018 and top possible resistance around the 12400, which is a big round number. There is a supporting trend line which offers strong support at 11960 (this supporting trend line extending from the lows of February 2016, June 2016 and the 11 September 2018 respectively). MACD on the Daily is suggesting a bearish crossover.



On 4H TF, we have a bearish M patternm along with a shooting star and break below the 200sma.

On lower TFs I see resistance at the 100MA’s on 15m, along with the 200sma on 5m and 1m, respectively around the 12246-12253pts range. This could be a level to short from, however, I would have SLs no greater than 20pts here.

Should the DAX break north, then I expect to see stronger resistance at 12322pts for another possible short entry at the 2H 100sma. Again, I would use no greater than a 20SL here. Try to look for reversal candles on 5m or 15m for the short signal.

Should we break through this level, then I expect the upper range of the penant to be challenged at 12400 or at 12408 at the Daily 100ema as another level to short. Also, look for the short signal reversal on 5m or 15m.

To the downside I expect 12200, the Big round number, to offer some support. And if this breaks then I would look to the low of 15 August 2018 to offer some support around 12110 with the bottom of the penant offering the strongest support at 11960 for a possible buy position.

Summary of Key Levels

R3: Strongest resistance: 12400-12408. Sell, SL 20pts, TP R2

R2: Reasonable resistance: 12322, Sell, SL 20pts, TP R1

R1: Immediate resistance: 12246-12253, Sell SL 20pts, TP S1

S1: Immediate support: 12200, Buy SL 25pts, TP R1

S2: Reasonable support: 12110, Buy SL 25pts, TP S1

S3: Strongest support: 11960, But SL 40pts, TP S1

Best of luck trading today,

Regards Gary