Jul 27, 2015

DAX chart update and trading with the moon:)

UPDATE - added the bearish scenario.
Now if the bounce around 11000-11100 is weak and we see another lower low the move lower will look like an impulse which makes the picture more bearish. Than we should see a a retracement which I would like to see staying below 11400 and find resistance at MA50 on the daily chart - if this plays out the chart below is the new road map.
We want to be prepared for a bearish outcome and here is how the bearish scenario look like - the move up since September 2011 finished in May 2015 and huge correction is running already. One leg lower zig-zag W, expanded flat 3-3-5 for X which will explain the impulse higher(which causes the confusion). Now the next zig-zag lower Y is running and in October he DAX should be around 10000... and this should be only the first part of the correction.




Here is the DAX chart updated. The move lower DAX and the US indexes looks scary.... but with impulse higher and 40 weeks low 3 weeks ago I will be very surprised if the top is behind us. The DAX has just reached the target 11100 - the support level(the gap), 61,8% FIbo retracement and the second leg is now 1,618 the size of the first leg lower.
Bullish scenario - at least one more leg higher with the same size for a double top... but I think we will see an impulse higher(the green path)
If we see only a bounce from the support level and the price continue lower below 11000 probably something else is going on.



And here trading with the moon for fun:)... or not!
There is many blogs about trading using the moon, the sun or astrology. Maybe you have already stumbled upon such pages. I am not paying much attention because the tools I use are good enough and no need to make it more complicated. The easiest method is to expect reversal around full moon. I was aware of this and today I have decided to see what happens around full moon - 2014 move higher and 2015 so far sideway move. I would say it works surprisingly good. Add some simple rules for example simple technical analysis sell/buy trigger and trade in the direction of the prevailing trend and you definitely will beat the index and buy and hold tactic.

Very often there is reversal around full moon +-2 days. There is 2-3 times it has not worked so gut, but nothing works 100%. By the way FOMC often marks reversals and on Friday is full moon... so let's see if it will work out again this week.


The numbers in the circles show how many days before or after the top/bottom was full moon.

6 comments:

  1. Thanks, very good post. Moon is indeed making on impact to stock indexes, especially Dax.

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  2. I have posted a new chart with the bearish scenario... soon we will know what is going on.

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  3. Hi there,

    No, the moon is not making any inpact on any stock indexes :-)

    The only thing that makes an inpact on trading is people who trade.

    Thank you for sharing.

    Regards
    Jonbert Davidsen
    www.DavidsenConsulting.com

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    Replies
    1. Hi,
      of course the people are trading. And how they are trading - with their emotions. No, it is not logical decision it is emotional. If it was logical Elliott waves and technical analysis would never work. And what influence their emotions?
      Yes it sounds stupid their is no evidence but fact is around full moon/new moon there is bottoms/tops.
      Trading system based on this will not be worse than most of the others trading system.
      Yesterday was new moon and today the exchanges will open - what do you think will happen this week:)
      I do not use astrology,planets, moon, solar cycles. But there is a few guys doing astonishingly good using them.

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  4. Hi again

    Interesting - what I will agree with you about, and what I believe we can learn a lot from is that most trading systems does not work; and the reason why this is so could be because people do not stay with a method long enough. Since trading is a probability business we have to do the same thing over a long periode of time; but most traders get bored, scared or something else, if this have some trouble along the way, and they abandon the system.

    I do also believe trading is more emotional than logical. In a way the chart is "filled" with feelings - we can "see" this since we like to do something most of the time, when we look at a chart.

    I am just questioning the correlation between the moon and the emotions; but it is not so important to be "right" or "wrong" (in my oppinion :-) ) it is much better to try to understand different point of views.

    Cheers,
    Jonbert Davidsen
    www.DavidsenConsulting.com

    ReplyDelete
    Replies
    1. This is the game - emotions and 90% psychology.... that is why "the most systems does not work". Systems are fine the people can not get their emotions under control that is the problem. Many even do not know or understand it. I know it very good and I continue to struggle with this for years:)
      The rest 10% is something what you feel comfortable with - EW,TA, the moon what ever. There is no right or wrong for every trader fits something different:)

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