DAX Sights All Time High 13800Hello Fellow Traders!
Indices experienced slight recovery last night with SPX (US500) up 2%, Nasdaq up 2.94%, UK100 up 1.39% and DAX 2.07%
The SPX (US500) has broken pre Covid highs aided by the US tech sector, while the broader market has struggled to test related levels.
The DAX has positioned itself for an advance to reclaim historical levels.
Caution: This zone will act as resistance. Also, this trade is suggesting the global markets will bounce in the short term.
Key Points:
- Price holding above the 200 EMA
- Price holding above the 50 EMA
- Above all Fibonacci levels from the Covid range drop. Next resistance is the All Time High.
- Covid Gap from initial drop has yet to be filled.
- RSI positioned for upside
Key Levels:
Support – 13100, 50 EMA, 12850, 200 EMA
Resistance – Caution Zone, 13450, Above Covid Gap, 13800
Entry Zone:
Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.
Optimal Entry – 13000
Supporting Entry – 13100
Candle Reversals for entry
- Bullish Hammer
- Bullish Engulfing
- Bullish Piercing
The Risk:
As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.
If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.
IF: Price breaks above 12850 level and/or violates 50 EMA – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.
Reward / Reward Targets:
Optimal Entry 13000 – Target 1 13450 = 3x Reward to Risk
Optimal Entry 13000 – Target 2 13800 = 5x Reward to Risk
Supporting Entry 13100 – Target 1 13450 = 1.5x Reward to Risk
Supporting Entry 13100 – Target 2 13800 = 2.7x Reward to Risk
