Trade of the Week: long DAX
This week's trade is long DAX, with a stop at 15,570. The index has fallen back from its recent record highs but has held key support at 15,700. As long as this remains the case there is the potential for renewed upside.
(Video Transcript)
Dollar / yen trade fared well
Welcome to Trade of the Week beginning Monday 14 August 2023. We'll look at this week's trade, but first we look back to last week's trades.
This was to go long US dollar/Japanese yen, which I was looking at last week, and that has done quite nicely, in fact. We looked at a lot of the stuff of one 141.26 and after the brief period of weakness at the end of the first week of August, the currency path rallied on Monday.
It didn't really look back since then. You could call it bounce off the 50-day moving average. It certainly didn't hit it but certainly recovered above the 50 day stochastic high and the price now finds itself back at 145. So you could see how far this one runs. You can move the stock, perhaps to break even or maybe get to close above at these June-July highs.
That might be the catalyst to see some more upside. So what I think the Monitor appears to be working in our favour for the time being. So that trade at least doing quite well.
DAX shows long-term promise
Moving to this week for the week beginning, Monday 14 August. And this time we're looking at the DAX, which has been frustrating at best for those looking for a decent move to the outside of the DAX.
This was because every time you think it really is about to take off again, it just drops back again, and that's happened in May and June and indeed right into August, when the index did recently hit a new record high in intraday basis. Since then, it's fallen back.
But as you can see, over the last two weeks or so, the price has been staunchly defending at the 15,700 level. By that I mean it hasn't closed below that. That's the big area of support that we've seen since April and with a brief interlude in July, has held since then.
So long as this remains in place, we're looking to go long on the DAX. Now we're going to put a stop down below 15,570 with an initial target up towards the 16,500 level of those August highs. And potentially on from there, indices have tried to recover in trading this morning and, indeed, US futures are stronger.
So we'll see whether that continues into the rest of the session and beyond.
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