Chart #1 - DAX Futures Weekly
Last week was pretty strong for German DAX, as we can see on the weekly futures chart. However, lot of that move came in the premarket sessions of Wednesday and Thursday. It was nice for swing long holders, but not so much for day-traders, left with just scraps for the RTH session. On Friday we had NFP report, and again a smaller range. However, day-trading opportunities, but smaller ones, could be found in both directions.
Below are several DAX and SPX charts.
Let's go down a bit to daily chart.
Chart #2 - DAX CFD Daily
Break above 12k and price above DMA50. Price up, ATR down - normal.
Let's move down a bit.
Chart #3 - DAX CFD 240 min
Price have retested broken areas of resistance, - so far so good for the buyers - and on Friday we had a small reaction from 12,200 resistance. If you would make a fib out of all the down move starting from July 4th to the Aug 15th low - 61.8 of it is around 12,130. So, price is above this reference also. However, last line of defence for sellers is still here, in the 12,200-300 area. Holding above it, opens road to 12,460 and higher levels of resistance, like 12,600 and this year high of 12,660. All eyes now on Draghi, coming on a stand on Thursday.
Chart #4 - SPX CFD 240 min
And while DAX was leading this week, SPX was still below its own inflection point, which was 2942, until it also made a break. But guess what - it did it in the Overnight session. DAX is usually a follower, not a leader. This week it was a leader, and SPX finally made a breakout as well. Possible scenarios are as usual - continuation to the upside to ATH level and rising trendline, OR false breakout. False breakout is now lower odd scenario. The one that IF happens, would catch majority of traders unprepared.
Now is the time to observe CASH charts, ones without premarket / overnight sessions. Also it could be beneficial to look for correlated markets - RUT still lagging behind in US - AND leading stocks. I did a "German stocks thread" on Thursday. For US markets, traders IMO should look at leading stocks also, like FAANG and Microsoft, Nvidia, maybe some others as well. IMO - Indices are currently looking more bullish than leading stocks. In German market, SAP and Allianz have that bullish look, others - not so much, but that can change.
Lets see those cash charts.
Chart #5 - DAX Cash Index Daily
Gaps on close of Sep 3, 4 and 5... Markets usually don't like this. Just compare this chart with previous ones, where this moves looks "fluid". Premarket sessions are sessions with low volume, and as such, S/R references made in them carrie less weight. Fresh example of this was swing low made on Aug 6th around 11,445. Later market revisited that area in RTH session, and made a new swing low. Important lows and highs are usually made in RTH sessions.
Prior large gaps on this chart was filled, and structure "repaired". However, if bullish momentum continues, that kind of gap filling can be delayed by significant amount of time. Something to "carry on" as an information.
Chart #6 - SPX Cash Daily
Same goes for SPX, who left few gaps behind, and especially this last one, on the breakout from the balance area, that was pretty big.
Generally speaking, stacking gaps behind, and building a rally on structure like shown on cash charts, increase chance of sudden liquidation breaks and filling some, or all of this gaps. For now, bulls are in control, and next inflection points on large timeframes for DAX are 12,200, then unfilled gap at 12,253, then 12,300 and so on. There are plenty of zones available for Subscribers of DAILY DOSE OF DAX Service for day-trading German DAX.
Next week, beside Trade War and Brexit, with "Headline risk" on these subjects, we will have most important day on Thursday, Sep 12 - EU Main Refinancing Rate, Monetary Policy Statement and ECB Press Conference.
Day-traders - IF no momentum presents itself, zone-2-zone trades again, carry on information about unfilled gaps below, where are inflection points, and go long / short from them without having bias. On both DAX and SPX, buyers are in control, and we observe tempo, momentum or lack of it and adjust to movement. Day by day.
I hope that you all had a relaxing weekend, stay fresh, well rested and focused for Monday.