Trading the DAX30 with the open range breakout: January 30, 2019

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  • 30.01.2019
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Since the beginning of the year, particularly since January 4, chances seemed high that sooner, rather than later, the DAX30 CFD would go for a re-test and probably rise back above 11,000 points.

Due to a combination of several factors such as:

  • May’s crushing defeat in the UK parliament – which makes concessions from the EU towards the UK in regards to the Brexit deal more likely,
  • Rising speculations of a more dovish ECB in the near-term, and
  • The technical relevance of the region around 10,970/11,000 points causing options traders to likely hedge their exposure,

The DAX30 CFD reconquered the level at 11,000 points on January 18.

DAX30 movement between September 29, 2017 and January 25, 2019

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD daily chart (between September 29, 2017 to January 25, 2019). Accessed: January 25, 2019 at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

As readers can imagine, it was possible to be positioned on the upside of this stint on January 18. This could be accomplished using the open range breakout strategy, as presented in one of Admiral Markets’
educational webinars.

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

  1. Define open range between 8:00am and 9:05am (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, let’s go through these three steps and see how the setup would have performed on January 18, 2018:

  1. The high and low between 08:00 and 09:05am (CET) ranged in value between 10,970 and 11,006.5 points, so the open range covers a value 36.5 points.

DAX30 open range values

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5 minute chart (between January 18, 2019 to January 18, 2019). Accessed: January 25, 2019 at 1:30pm CET – Please note: Past performance is not a reliable indicator of future results, or future performance.

  1. As detailed in the chart above, the DAX30 CFD traded above the EMA(50) on a 5-minute time frame (the blue line). This means that only long trades will be taken, and only if the DAX30 CFD breaks out on the up-side of the open range.

DAX30 open range break out value

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5 minute chart (between January 18, 2019 to January 18, 2019). Accessed: January 25, 2019 at 1:30pm CET – Please note: Past performance is not a reliable indicator of future results, or future performance.

  1. As the chart above demonstrates, the DAX30 CFD broke out of its open range on the upside and started to move in the direction of the breakout. The stop was placed at the low of the range at 10,970 resulting in a risk of 36.5 points. Since the setup works with a take profit 2R away from the entry point of the trade, a sell limit was placed at 11,079.5 points, 73 points away from the entry point. The target was hit within the next hours, resulting in a profit of 73 points : 365 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%, and in 2018, it fell by 18.26%, meaning that after five years it was up by 10.5%.

Check out Admiral Markets’ most competitive conditions on the
DAX30 CFD and start trading on the DAX30 CFD with a low 0.8 point spread offering during the main Xetra trading hours.

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

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