2025-05-12 - priceactiontds - daily update - dax
Good Evening and I hope you are well.
comment: If you are a bull and longed anything last week and market hit your 24000 target today, you either took profits at the top and were happy about it or you watched them burn. Now what should we expect when the market hits 24000 the next time? Will bulls willingly hold through another pullback, knowing that it could be 500+ points deep again? I highly doubt that. Usually markets reach their targets and spend more time there or overshoot some to run more stops. Today we did not see any of that, which makes me think this could very well be the exhaustive end of the move → exhaustion gap.
current market cycle: broad bull channel or trading range - doesn’t matter since you trade them the same
key levels: 22000 - 24100
bull case: Bulls need to find acceptance above 23700 and go sideways here. Another strong move below 23500 would mean the bull trend line is broken for good and market could test lower in search of bigger support. I don’t have any targets above 24000 for the bulls and since the pullback was that deep, I am having a hard time believing we could do anything much higher than 24100. With today’s price action, I expect bulls to retest 24000 and maybe some, just to run stops but I do think most bulls will take profits there and bears will short it aggressively again, since it was so profitable today.
Invalidation is below 23300.
bear case: Bears did good in closing the gap down to 23588, making this an exhaustion gap. They will likely short again above 23800 since it has been profitable all day. Only a very strong move above 24100+ would force more bears to cover and we could accelerate up. Therefor sideways 23000 - 24000 is my expect price action for this week. Could bears push it down further because we have Opex? No idea and you should never try to ask why markets are doing something because you will never know the answer. Below 23400 I expect 23000 to come fast.
Invalidation is above 24100.
short term: Neutral. 23000 - 24000 is the range I see for the next days or even weeks, until we get better selling pressure. Trade the bull channel until it’s clearly broken.
medium-long term from 2025-05-11: So here is my very rough guess about the next months. This short squeeze is clearly overdone and global macro stuff has most likely already deteriorated a great deal. Down to 20000 over the next weeks and form a big trading range. Up through October-Year end. Zero thought about a new bull trend above 24000 or that we have seen the lows for either 2025 or 2026. Good question is always, “How would you allocate 100k right now?”. 50% short dax, 25% of it levered/options and with the rest I would scalp.
trade of the day: Long Globex open was the obvious trade but shorting 24000 was the even better one. I did not think the short was obvious and I took too long to realize it’s strength and then my risk was bigger than I was comfortable with, so I let it go down without me. I caught another long afterwards for 120+ points.
