01.11.2011 - DAX, is that it?

Everyone who was watching the markets during the last couple of weeks probably will be thrilled. It's more action than in every Hollywood movie.

DAX

By now you already should have made big profits, if you entered short on 6.400 following my blog. What we need now is an exit strategy! In my previous analysis I claimed that a sell-off to 4.600 points could be expected. The important thing is, that this has to go fast. Any major set backs and this opportunity will vanish.

Having a look at the price chart we can make out a major resistance around 5.800 points. As a matter of fact, a rebound is likely. But that's not a market where every rule of technical analysis applies. Resistance of EMA 100 and EMA 50 and trend-line resistance of price and RSI(14) have been crushed with ease. Ergo, if price keeps moving with fast pace, a rebound has to wait. 

Keep in mind: Panic is a stronger feeling than greed. Markets do not respect the rules when fear sets in, and that's more likely when price is falling.

Stay calm and drink some tea. If the 5.800 (5.740) should fall price is likely to go even further down. As long there is no sign of a rebound - not to speak a new uptrend - there is no need to sell your short position too early. One might regret getting out when price keeps declining. Should there be see a close at say 5.900, that's a chance to sell and take profits. As I said, the down move has to go quick and any major break is a sell signal. You have to decide for yourself: a conservative trader might take profits right now, where as a trader willing to take some "risk" - meaning less profit - should stick with the plan.