The Dax has been trending down lately, confirmed by the lower lows and lower highs. The recent failed break of the low at 11,047, shows this market is consolidating.

The exponential moving averages also confirm this as a downtrend, shown by the EMA’s being in the correct order. The 200 EMA highest, followed by the 50, 21 and then the 8 EMA. They began to fan out until the failed break of the low.

Expect to see the EMA’s bunch together again before seeing the DAX break lower.

181127 DAX Daily

Support Levels: 11,060 & 10,777
Resistance Levels: 11,684

The moving averages will act as resistance as well as the resistance level at 11,684, this would be an area to look to sell.

The 200 moving average has in the past held well on the daily chart, therefore whilst you could sell at the 50 EMA or at resistance, the higher probability trade would be to wait for the 200 EMA to be tested, ideally at a confluence with other indicators, in this case the resistance level.

One of the issues with waiting for higher probability trades is that they can go without you. Meaning that the 200 EMA might not be tested and the market may break lower without you. Deciding how to trade is dependent on the trader, those who are more risk averse will wait for the 200 EMA.

 

 

Disclaimer: This should not be used as investment advice and is only an opinion. Do your own research before looking to risk your own capital in the financial markets.


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