Trading the DAX30 with the Open Range Breakout: January 16, 2019

  • master
  • 17.01.2019
  • Comments Off on Trading the DAX30 with the Open Range Breakout: January 16, 2019

After scepticism from market participants at the start of 2019, and the high volatility between Christmas and New Year’s Eve, bulls finally caught some backwind and went for a re-test of the region around 11,000 points.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD daily chart (between 29 September 2017 to 11 January 2019). Accessed: 11 January 2019 at 10:00 PM GMT

Please note: Past performance is not a reliable indicator of future results, or future performance.

The fact that the DAX30 CFD bulls are gaining more and more control could already be seen one day earlier, on Thursday January 3rd. After
Apple cut its revenue outlook for the first time in almost two decades, the DAX30 CFD initially failed to break above 10,660/680 points. However, it also didn’t break below 10,400 points.

On Friday, bulls finally found enough confidence to push the DAX30 CFD higher once the news hit the wire that China would cut its reserve requirement ratio by 1%. Later, strong NFPs and
comments from FED chairman Jay Powell triggered further strength, resulting in a close of more than 3% higher for the day.

As you can imagine, it was possible to be positioned in this stint on the upside on January 4.

But before we go into further details, let’s recall the three steps of the DAX30 CFD open range breakout strategy:

  1. Define open range between 8:00 am and 9:05 am (CET)
  2. Identify the advantage: based on the 5-min-EMA (50)
    • DAX30 CFD trades above → Long
    • DAX30 CFD trades below → Short
  3. Trade the break of the open range in direction of the identified advantage
    • Stop: Above/below the high/low of the range (= 1R)
    • Take profit: 2R away from the entry point of the trade

In the following paragraphs we will go through these three steps and see how the setup would have performed on January 4, 2019.

  1. The high and low between 08:00 am and 09:05 am (CET) can be found between 10,507 and 10,550 points, so the open range is 43 points wide.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5 minute chart (between 04 January 2019 to 04 January 2019). Accessed: 10 January 2019 at 1:30 PM CET. Please note: Past performance is not a reliable indicator of future results, or future performance.

  1. As you can see in the chart above, the DAX30 CFD broke out on the downside first, even though no short trade was triggered (pink mark). The reason is when the 5-minute candle before the breakout occurred, the DAX30 CFD traded above the EMA (50), meaning that a buy stop order was placed.

With the break lower and 5-minute close below the EMA (50), the order was switched to a sell stop, which also wasn’t triggered. With the 5-minute close above the EMA (50) at 09:55 (CET) another buy stop was placed and then triggered several minutes later.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5 minute chart (between 04 January 2019 to 04 January 2019). Accessed: 10 January 2019 at 1:30 PM CET. Please note: Past performance is not a reliable indicator of future results, or future performance.

  1. As shown on the chart above, the DAX30 CFD broke out of its open range on the upside and started to move in the direction of the breakout on the upside.

The stop was placed at the low of the range at 10,507 resulting in a risk of 43 points.

Since the setup works with a take profit 2R away from the entry point of the trade, a sell limit was placed at 10,636 points, 86 points away from the entry point.

The target was hit within the next few hours, resulting in profit of 86 points and a profit factor of 96 points: 43 points = 2 : 1.

In 2014, the value of the DAX30 CFD increased by 2.65%, in 2015, it increased by 9.56%, in 2016 it increased by 6.87%, in 2017 it increased by 12.51%, in 2018 it fell by 18.26%, meaning that after five years, it was up by 10.5%.

To test the Admiral Markets DAX30 CFD offering in combination with the described strategy above,
register for a free demo account today and experience the live market risk free!

MT5

Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
  3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter “Author”) based on the Author’s personal estimations.
  4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
  5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
  6. The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
  7. Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  8. The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
  9. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.