DAX daily chart: prices under pression
I propose a ‘comparative’ view on Dax and Nasdaq as it is interesting from a graphical point of view. Essentially, in the last session we saw a more than similar price rebound but on apparently different areas. A factor to consider is that the recovery of both instruments took place in the very last hours of Friday, closing daily and, importantly, weekly.
As highlighted on the graph, the dax continues to compress into a triangle which, in the hypothesis of a long exit, would see ‘monstrous’ goals … Possible? We are not soothsayers and we betray the evidence. The rebound on the trendline was surgical.
I shorted the Dax having a profit but I left a long position open which for now has 94 points of gain, but I consider it a gamble, as the next opening is, today more than ever, an unknown.
Nasdaq perfect rebound on bullish trendline
He also rebounds but in an unclear point: the daily trendline is broken and seems to want to remain so … At this point I refer to an analysis made a couple of weeks ago when I said that the target is long following the breaking of the triangle it could have recalled the price towards the area where the vertex of this triangle is located: well, the thing happened and only then did the price rise again.
Here too the recommendation is the same: we betray the evidence.
In fact, the Nasdaq would show a more obvious weakness while the Dax would seem to push back up, but will the resistance that goes to make up the upper side of the triangle be broken?
I invite you to take a look at the weekly charts, you will notice substantial differences.
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DAX vs Nasdaq: spread trading
In this part of the article I will also show you the spread trading ratio between DAX and Nasdaq with the use of Lorenzo Sentino’s We-Spread indicator.
It may seem absurd to those who are not used to looking at the statistics but for 3 months a bullish cycle of the spread between DAX and Nasdaq has started.
What does it mean?
It means that the DAX is performing better than the Nasdaq and that a LONG open spread of DAX and NASDAQ SHORT would have generated profits. With this in mind, therefore, we will continue to follow the bullish cycle and therefore to do bullish spread trading.
We-Spread DAX vs Nasdaq chart
Forecast spread trading for 8-13th March
From the chart above you can see that if we had bought DAX and sold Nasdaq from the 1st of December 2020 we would have a net performance of + 7%. That is, if we had invested € 10,000 per side of the spread (even in leverage with a margin employed of just € 500) we would have a profit of € 700.
It should be noted that there would have been another good entry opportunity also in the third week of January 2021.
Now the curve is at the top of the We-Spread and indicates caution. There is still no signal of a reversal of the spread but in these cases it is possible to witness a weakening of the bullish structure.