#202445 - priceactiontds - weekly update - dax

Good Evening and I hope you are well.

tl;dr
dax xetra: Neutral. Choppy week with going nowhere. Market was moving sideways while other markets melted higher. Can’t be anything but neutral, since market is contracting in a tighter range. If I had to guess, I’d say bulls have a slightly higher chance of printing a new ath than bears breaking below 19000, just due to overall market euphoria. If bears break below 19000, measured move down is 18000. Bullish break above 19700 and we go for 20000. Buying below 19200 has been profitable for 2 months and I don’t expect it to fail next week.


Quote from last week:

comment:

Big week for the bears since they broke the bull rally and most recent trend line, which turned the market neutral at previous support. Now comes the most important price action for the coming weeks. If bears get their strong second leg down, we will see 18200 in November, if we go sideways from here, odds drop for the bears and market is probably ranging more at the highs. It would also keep the possibility alive to print 20000 this year. The timing of the selling was in between very good earnings and mediocre outlooks. If we continue down, this would probably mean funds want to secure profits in this year and the selling could accelerate.

comment: Bears failed at 19000 which keeps 20000 alive and it’s more likely that we continue sideways than a break to the downside. Above 19600 I would favor the bulls to get it to a new ath and potentially to 20000. Wednesday was the most important day last week and I would join either side above or below that bar. Otherwise there is currently no deeper meaning of this trading range near the ath.

current market cycle: trading range

key levels: 18900 - 20000

bull case: Bulls failed on Wednesday where they were rejected big time from 19560 for 500 points down. They have been printing higher lows since and now they need a break above 19600 for 19700 and then potentially 20000. As of now the market is in balance around 19300 and the triangle will play out some more. Any long below 19200 has been profitable for a month, so look for longs in that area, until it’s clearly broken.
Invalidation is below 19000.

bear case: Even with the big reversal on Wednesday, bears do not have much right now. Support is holding and market is spiking up, rather than below. As long as bears can’t print a daily close below 19000, it is useless to look at this from a bearish point of view. Even if bears get below 19000, the weekly 20ema is around 18800, so the downside is probably very limited, while bulls have the big target 800 points higher.
Invalidation is above 19700.

outlook last week:

short term:

Bearish for a second leg down, as long as we stay below 19400.

→ Last Sunday we traded 19254 and now we are at 19215. Monday and Tuesday were nothingburger and Wednesday crossed my invalidation line pretty fast. Wrong outlook anyway.

short term: Neutral 19000 - 19700, bullish above for 20000. I do think the triangle could play out some more and I am currently more willing to buy below 19200 than to short 19600.

medium-long term - Update from 2024-10-19: 20000 is the goal for 2024, if bulls do not get it until year end, it will probably not happen for the next 5-10 years. This market is beyond overvalued and will drop 30-50% in the next 5 years. I have no doubts about that. That fact should not be relevant to your trading at all.

current swing trade: None

chart update: Changed two legged correction into 3 legs down, target is the same for now.