202421 - a weekly price action market recap and outlook - dax
dax cfd
Quote from last week:
bull case: Bears gave up since Monday and we melted 800 points higher. I got 2 measured move targets above, 19280 and 19650. Technically we should see a pull-back first and depending on how deep it is, we can calculate new targets. I think next week everything will be determined by the PPI and CPI prints. If they come in low, I think it’s very likely that we will see the 20000.
comment: Got that pull-back on Monday but weak and shallow. Bears tried again on Tuesday but bulls bought the ppi spike and rallied to a new ath 19006. Thursday was an surprisingly strong bear day and we sold off for 230 points and bulls could not get it much higher than 18800 on Friday. Both of my wave theses are still valid and Monday or Tuesday will determine the outcome. I won’t be a perma bear here and early again. Completely open to bulls melting up for my measured move targets or even 20000.
current market cycle: Bull trend or trading range. If bulls keep going past 19000, obviously a bull trend but if they fail to print much higher than 19100, this was just a higher high in a trading range 17600 - 19000.
key levels: 18400 / 20000
bull case: Bulls got a new ath and market sold off for 200 points to close the week below 18900 which was the second weekly rejection of that price level. Bulls need to keep this pull-back shallow, inside the small bull channel and above the daily 20ema for continuation. The bull channel and the daily ema are close enough for me to think we either go sideways to touch them or dip and bounce. That would be a perfect two legged correction and odds would favor the bulls for a third leg up. Invalidation price would be somewhere between 18500 - 18600 and then the big bull trend line has to hold if we get there or the trend is done and we are in a trading range.
bear case: Last time we got here to a new ath, we pulled-back for 1300 points, very shortly after. Bears printed one good looking bearish engulfing candle on Thursday but for more bulls to begin taking profits, they need consecutive bear bars closing near the lows. If they can’t do that and market goes sideways, bulls will take it as a buy signal because after such a strong rally, odds favor another leg up. Right now market printed an expanding triangle and a two legged pullback near the bull trend line and ema. All of those patterns are buy signals. All of them can fail and we sell-off but from an odds perspective, bears are not favored until they do more. Invalidation for bears is above 18900ish.
outlook last week: “Pull-back should happen but longs are favored until bears make lower lows and break the 1h 20ema. I updated my daily chart but it’s only a very rough guess. Inflation prints will dominate the markets this week and I will give daily updates.”
→ Last Sunday we traded 18894 and now we are at 18805. Two-legged pull-back happened as laid out.
short term: Can’t be anything but neutral with if-statements. If we strongly break below 18600 and bears keep the selling pressure high, this higher high double top could have been it and we get 18300-18400 next. If bulls (they are slightly favored) manage to break above 18900 again, we will most probably retest the ath or go directly into the third leg up or W5.
medium-long term: Time runs thin on my -20 to -30% correction target so I need to adjust the timeline. I’m confident we will print 17000 over the next 2-3 Months but 16600 could be tough so that could happen early 2025 as well. Will update this along the way. —unchanged
current swing trade: Shorted 18971 on 2024-05-16 and took profits on 2024-05-17. Will update this in the daily after hour updates from next week on.
Chart update: Updated wave thesis slightly and removed the first two-legged correction because it does not add value from here on.
Quote from last week:
bull case: Bears gave up since Monday and we melted 800 points higher. I got 2 measured move targets above, 19280 and 19650. Technically we should see a pull-back first and depending on how deep it is, we can calculate new targets. I think next week everything will be determined by the PPI and CPI prints. If they come in low, I think it’s very likely that we will see the 20000.
comment: Got that pull-back on Monday but weak and shallow. Bears tried again on Tuesday but bulls bought the ppi spike and rallied to a new ath 19006. Thursday was an surprisingly strong bear day and we sold off for 230 points and bulls could not get it much higher than 18800 on Friday. Both of my wave theses are still valid and Monday or Tuesday will determine the outcome. I won’t be a perma bear here and early again. Completely open to bulls melting up for my measured move targets or even 20000.
current market cycle: Bull trend or trading range. If bulls keep going past 19000, obviously a bull trend but if they fail to print much higher than 19100, this was just a higher high in a trading range 17600 - 19000.
key levels: 18400 / 20000
bull case: Bulls got a new ath and market sold off for 200 points to close the week below 18900 which was the second weekly rejection of that price level. Bulls need to keep this pull-back shallow, inside the small bull channel and above the daily 20ema for continuation. The bull channel and the daily ema are close enough for me to think we either go sideways to touch them or dip and bounce. That would be a perfect two legged correction and odds would favor the bulls for a third leg up. Invalidation price would be somewhere between 18500 - 18600 and then the big bull trend line has to hold if we get there or the trend is done and we are in a trading range.
bear case: Last time we got here to a new ath, we pulled-back for 1300 points, very shortly after. Bears printed one good looking bearish engulfing candle on Thursday but for more bulls to begin taking profits, they need consecutive bear bars closing near the lows. If they can’t do that and market goes sideways, bulls will take it as a buy signal because after such a strong rally, odds favor another leg up. Right now market printed an expanding triangle and a two legged pullback near the bull trend line and ema. All of those patterns are buy signals. All of them can fail and we sell-off but from an odds perspective, bears are not favored until they do more. Invalidation for bears is above 18900ish.
outlook last week: “Pull-back should happen but longs are favored until bears make lower lows and break the 1h 20ema. I updated my daily chart but it’s only a very rough guess. Inflation prints will dominate the markets this week and I will give daily updates.”
→ Last Sunday we traded 18894 and now we are at 18805. Two-legged pull-back happened as laid out.
short term: Can’t be anything but neutral with if-statements. If we strongly break below 18600 and bears keep the selling pressure high, this higher high double top could have been it and we get 18300-18400 next. If bulls (they are slightly favored) manage to break above 18900 again, we will most probably retest the ath or go directly into the third leg up or W5.
medium-long term: Time runs thin on my -20 to -30% correction target so I need to adjust the timeline. I’m confident we will print 17000 over the next 2-3 Months but 16600 could be tough so that could happen early 2025 as well. Will update this along the way. —unchanged
current swing trade: Shorted 18971 on 2024-05-16 and took profits on 2024-05-17. Will update this in the daily after hour updates from next week on.
Chart update: Updated wave thesis slightly and removed the first two-legged correction because it does not add value from here on.
