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DAX index – hesitation before Sunday


Asian session today is mixed and European equities also failed to show any gains while US  e-minis retreated. This was expected as all the focus of markets is on upcoming Trump-Xi meeting. Headlines and predictions of the meeting outcome are various but I believe Trump desperately needs to deliver some good news to markets before X-mas. Recent sudden dovish tone from Powell is also likely the result of some behind curtain politics.

Are there any chance to see traditional December  stocks rally? Frankly, if we look at charts without prejudice there are not so much hope. On one side, almost all indices completed double bottom formation. This is perfectly seen on 4-hour chart and is a sign for cautious optimism.

DAX H4

DAX index 4-hour chart

However, for almost a week the DAX index is struggling to overcome 11360-11430 resistance area. Every attempt to climb above this strong cluster knocks price down. Currently, as I am writing this, price had fallen again – right to the local minor support. And while I am expecting today will be rangebound, yet this price action raises chances of another leg down.

My last week recommendation is to go long with stop-losses below last  minimums  at around 11020. This is still in play, however, probability of rally is diminishing and considering the weekend ahead, the chance of Monday gap is really high. For conservative traders – or if your exposure is large – I would recommend to  hedge  your long position via put options for over weekend. Or trim your positions tonight and reopen  on Monday opening – depending on headlines of course.

Have a nice weekend and safe trades !