Friday, April 17, 2015

DAX context and trades - 17/04/2015

Higher Time Frames:
Today's sell-off is still going on. So I decided to take a look at higher time frames. The weekly chart shows a nice Elliott channel and the price action hit the lower line. The momentum on the daily charts and above is still bullish, but the bears still have room especially considering this expanded flat correction pattern. Keep attention for signs of climax on the 4 hours chart and the unorthodox - often used today in Hungary :) - elliott channel (2 to 4 parallel to 1 to 3).

So the market once again reached and ideal level in many ways (correction channel, Fibonacci expansions and minimum Fibonacci retracement level), but this doesn't mean that the price action will stop right here. It is just an ideal place for it, we'll have to see and wait for reversal signals to trade swing long.
DAX: h4 - daily - weekly charts
14:42 (GMT+1)
I was really off with my last trade and  it got stopped out. Unfortunately I wasn't able to catch this nice drop. Too bad because I was really expecting at least a wave [v] of C. 

The intensity of this drop suggests that at least a flat C wave is going on. The sharp downside movement makes it difficult to determine the current wave degree. In my opinion the most likely scenario is that the extension of wave [iii] went on and almost reached 423,6 Fibonacchi ratio. The max level for a flat C on the daily chart is around 11400. The MA10 line on the weekly chart is getting really near, not to mention the 38.2 Fibonacchi retracement level. Above the aforementioned level I still expect at least one more backtest of the ATH, but for me this is neither the time and place for opening a short, nor trying to catch an end of flat C. Especially after reading the smaller degree wrong. My confidence in my trading decisions needs to be restored.

10:38 (GMT+1)
I opened 2 longs. I'm anticipating higher price as part of a correction. This is a little shaky though, because I'm not so sure that wave (b) is done. We'll see...
DAX: m15 - h1 - daily charts
This downside movement could be the end of a wave [iii]. This impulse wave is not a basic one, because the 3rd wave got extended. Thus the optimal level for a wave [iv] and the bottom line of the base channel got lower. The ideal retrace level for a wave [iv] right now is between 12000 and 12050, but due to the rule of alternation this correction is more likely to be a complex one (comparing to wave [ii]: flat, triangle or a combination pattern. So far there is no sign of reversal and because today is Friday I'm only planning to make quick scalps if I'll have the chance.
DAX: m15 - h4 - daily charts

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