In a previous prediction, I suggested the middle of march would be the end of the bearish trend that has been dominant in February and the first half of March. I still believe this to be the case, and do not expect the DAX to reach down significantly below 12000. However, there is a short opportunity for the next 24 hours.
The rectangle "A" marks the low on its left. At this point, people expecting the DAX to keep moving up, bought into it. They find themselves in the minus now, and are waiting for the DAX to reach that level again to break even and get out. It has been a source of resistance today, and will probably keep resisting tomorrow. At the same time, I feel there are enough bearish signals to drop the DAX to 12000, tomorrow.
Of course, fundementals are important too, and we do have a lot of them now:
1. Trumps trade war and his refusal to clearly state how it will affect Europe
2. Trumps threat of expanding his trade war with China
3. UK blaming Russia for the spy assassination and expelling diplomats
4. France, Germany and other EU countries joining the UK in blaming Russia
5. Trumps sanctions on Russia
6. Putin has yet to react, and although it may be muted at this time due to the Russian elections, could still be significant
Any one of these things could develop further and cause the DAX to drop.
My trade is, as always, an Option on the DAX:
Put Option
Target: 12000, or best low on Friday afternoon
Stop Loss: 12460
Manual close possible on Friday before markets close, depending on developments.
The rectangle "A" marks the low on its left. At this point, people expecting the DAX to keep moving up, bought into it. They find themselves in the minus now, and are waiting for the DAX to reach that level again to break even and get out. It has been a source of resistance today, and will probably keep resisting tomorrow. At the same time, I feel there are enough bearish signals to drop the DAX to 12000, tomorrow.
Of course, fundementals are important too, and we do have a lot of them now:
1. Trumps trade war and his refusal to clearly state how it will affect Europe
2. Trumps threat of expanding his trade war with China
3. UK blaming Russia for the spy assassination and expelling diplomats
4. France, Germany and other EU countries joining the UK in blaming Russia
5. Trumps sanctions on Russia
6. Putin has yet to react, and although it may be muted at this time due to the Russian elections, could still be significant
Any one of these things could develop further and cause the DAX to drop.
My trade is, as always, an Option on the DAX:
Put Option
Target: 12000, or best low on Friday afternoon
Stop Loss: 12460
Manual close possible on Friday before markets close, depending on developments.
Trade active
Comment:
excuse the moving average line.... I dont know why its there.
Trade closed manually:
So it took a day longer than expected to go down, but the stop-loss was very well placed did not trigger. There is potential that the DAX will go down to 12070ish, but I am closing most of my position here. For those that bought a knock-out option, thats a 200% return. Ok, so back to waiting for the next signal from the DAX...