Weekly DAX Analyses - Nov 1, 2020

>> SHORT EDITION


Daylight Saving Time Shift starts today in the US, so from Monday, we are back to old timing, meaning NYSE Open will again be at 15:30 CET.


1. Scheduled data for the next week


US Presidential Election on Tuesday is the event of the week, event of the month... event of the quarter at least. I would not pay so much attention to headlines going into the event itself, simply the media nowadays NEED to have "click bait" headlines. I am old enough to know that half of that is total bullshit, like it was the last time - when they presented possible Trump victory like something that will crash the market. On election night, futures did hit limit down, but that initial drop was erased up to the open, and then it was "screens go green" and just up, up, up... for months. As always - stick to the charts.


Besides that, on Thursday there are FOMC Statement, Federal Funds Rate and FOMC Press Conference. On Friday: Non-Farm Employment Change and Unemployment Rate.


So - we are going to trade reactions, and for the directional moves - there will be plenty of opportunities once the dust settle. Markets have already made a solid correction, but there is room for both upside and downside. Swing traders that want to take risk are already in position. This environment of elevated volatility means bigger daily ranges, more opportunities, but also a possibility of massive loses for the traders that trade counter trend without stops. ONCE AGAIN - adjust your risk and money management.



2. Charts and thoughts


Let's start with this Monthly chart.



Without any doubt, DAX was the weakest one in October. Small cap index Russell 2000 - RUT had a green candle, but with visible rejection from 1,600 and with the ATH from 2018. Both SPX and NDX hovering around August lows.


On ES_F Daily chart, we can observe the confluence of the 23.6 Fibonacci retrace with the Support area.


DAX futures have hit the 38.2 Fibonacci retracement:


LTF Support was hit on Friday, a Support zone that was inline with the fib retrace. This is the place that buyers should hold.


While Futures went lower on Friday, there is a triple bottom on Cash Index chart.


And that bottom is inline with CASH Support LEVEL and Fib retrace on Index.



Like we can see on the DAX Daily Cash Index chart.

Different values for Fib 38.2 fib retraces on Cash and Futures are due to the different Corona low values.


Thoughts:

Question of the day: Since Cash did not test the DMA200 on July 31st like Futures - BUT it did tested that later, so will it also test Friday low, since it was made in the premarket?


Swing long traders are already in the position, so this is the risk for them. Support on Cash is 11,460 and on Futures 11,330.


IF price goes below 11,250 on Futures AND HOLDS THERE - THEN 10,850 and lower can trade. So, tasks for both Buyers and Sellers are clear.


No point going into details here, since US presidential elections can mess up any kind on technical picture, both on US indices and on DAX.


 

In short term trading it is very important to properly understand context heading into every day, to know from which side wind is blowing - who has the short term control, and which side will be forced to liquidate IF and WHEN market hold above or below a certain level. What is the level of volatility, what can we expect from any particular day, what market already done in premarket session, what possible setups can be available, and so on... the things that we constantly learn in the DAILY DOSE OF DAX.

Cheers, Relja a.k.a. StrayDog