Germany30: Session low coincided on trend line drawn from May 7th and May 14th low, as pullback tests support
The short term daily candle chart below shows the price history of the Germany30 contract for difference (CFD) which last traded around 11,457.00 around time of publication as the underlying index ended the session higher this Monday in Germany.
This CFD aims to track the underlying Deutscher Aktien Index (DAX) and last time it was reviewed in Ideas You Can Trade was last August before making a sustained recovery towards recent highs. Over the last month Germany30 has been in a steep pullback after holding nearly two months above 12,000.00 during March and April.
Since then support was found on the May 7th and May 14th low, the two lowest-lows last month, and drawing a trend line from those two low's intersects with today's low 11,339.50 - which indicates that support was testing this emerging bullish trend line (see blue line on chart below).
If support holds on this line - a recovery could be underway, whereas if support on that line fails then the trend is likely to continue lower along the upper line of the bearish channel (see purple down-channel on chart below).
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 11,601.00 with a Limit to take profit @ 11,699.00 and a stop-loss @ 11,520.00 Risk/Reward Summary: Limit risk = 98.00 points profit / (-81.00) Stop-loss risk = Gain to Loss ratio = 1.20
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 11,300.00 with a Limit to take profit @ 11,165.00 and a stop-loss @ 11,430.00 Risk/Reward Summary: Limit risk = 135.00 points profit / (-130.00) Stop-loss risk = Gain to Loss Ratio = 1.03
Medium Term Daily Candle Chart (zoomed-in):
Medium Term Daily Candle Chart (zoomed-out):