DAX Is At A Critical Stage of Price Action For The Week

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In our estimate, the DAX weekly is now at a critical juncture in terms of this week's price action. The candlestick of two weeks back is a long red candlestick down (aqua arrow). The range of the candle shows the fearsome selloff as news of the omicron variant emerged. However, last week, the DAX settled and a spinning top was charted. This is a candle of uncertainty, with neither the bulls nor bears in control, and the week closing relatively flat. Moreover, last week's candle charted the lowest low in a three-candle cluster (aqua ellipse). A close above last week's high (aqua horizontal) sets up a possible swing low. I.e., it provides a platform for a potential upswing (but does not guarantee it). If bulls are able to close out the week near the top of this week' price range, it will give a stronger signal, then if the close is only slightly above the aqua horizontal. Moreover, a close below the aqua horizontal will chart a long upper shadow i.e., bears will be on the cusp of regaining control.


Past Performance: Past Performance is not an indicator of future results.

The chart below on the left shows the DAX daily time frame. It has moved from the area of weakness, between the lower blue and lower red bands, into a more neutral area, between the two blue bands. This is bullish progress. Moreover, the daily stochastic has turned up, although it's still at a neutral reading around 50. The chart below on the right shows the DAX hourly time frame. Price has pulled back to the S1 pivot. If this fails pressure will be exerted on the weekly swing low scenario. In this regard the EMAs and the hourly stochastic are bearish (aqua ellipses). Thus, in our analysis, the S1 pivot is considered a key level of support.


Past Performance: Past Performance is not an indicator of future results.

Featured Image by Gerd Altmann from Pixabay

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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Past Performance: Past Performance is not an indicator of future results.

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