DAX index price action
The European markets opened on Monday with solid gap up and posted solid gains after weekend announcement of trade truce with China. (Well, who is next on the plate ? I bet it is Europe….) The news propelled the world stock markets sharply up while SP500 opened at all-times high levels and other indices rushed up in buying frenzy… Yet by the end of day stocks reversed and most European indices closed a day below opening level.
Which does look good at all. Technically, daily charts pictured a classic reversal candle and though it is too early to confirm the reversal, the setup looks tactically bearish.
The 4 hour chart configuration also shows the pattern of exhaustion and it normally follows with decline. Selling pressure will imminently increase if price make another attempt to rally and break the previous high – and we certainly like to sell in this situation. Again – rally attempt means tactical sell.
Yet, conservative and cautious approach is to wait for the price retreat and enter pro-trend long trade at certain strong supports – namely 12325 and especially strong support cluster at 12100-12140. As usual, place limit orders at those levels and split exposure in two.
Have a nice day,