DAX Crucial 1D MA200 test! Sell with low risk but BUY if broken!

4 พ.ย. 2022

The German stock index (DAX) has been trading within a Channel Up (Higher Highs/ Higher Lows) since the September 29 bottom. Following the contact with the 4H MA50 (blue trend-line) on Wednesday's Fed Rate Announcement, the price has been rebounding strongly, aiming at the 1D MA200 (red trend-line).

Having already broken above the January 05 Lower Highs trend-line last week, that would be the most crucial test for the long-term trend as the 1D MA200 has been unbroken since February 02, practically throughout the whole Bear Cycle of 2022. If broken, expect a Higher High on the Channel Up that would test the 13980 August 16 High (Resistance 1) where a 1W closing above it can target further upwards the 14710 June 06 High (Resistance 2).

Until the 1D MA200 break-out happens though, DAX's Channel Up draws heavy comparisons with the July 14 - August 16 Channel Up, which eventually topped and started a new heavy sell sequence that made the current market Low. As you see the top was formed after a 4H MA100/200 Bearish Cross (4H MA100 green trend-line crossing below the 4H MA200 orange trend-line), which is the pattern that DAX just formed today. On top of that, the 4H RSI sequences of the two Channel Up patterns are very similar following an (a)-(b)-(c)-(d) pattern. That means that until the price breaks and closes above the 1D MA200, being that close to it, we can take a low risk/ high reward sell and target the 4H MA200 (orange trend-line).


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