Trade view / 10 December 2012 at 5:21 GMT

Dutch AEX Technicals: New energy needed to confirm bullish action

Price target:
Market price:

The last couple of weeks have been quite odd, I think, as the AEX has been taking out previous peaks in a kind of sneaky and stealthy manner. This makes me very suspicious. Nonetheless, at the end of the day, price is king and the sole judge of if one is right or wrong and prices have been going up. I have one very potent bullish trading idea I would like to share with you.

Prerequisites: The correction in the Dutch market seems to have ended on the 16th of November and the Index has since then been in an uptrend without experiencing any larger pullbacks. The 50 day MA is turning positive and the 200 MA is going higher. Overall the AEX has been within a larger uptrend since September 2011. I interpret this larger uptrend as corrective, which means that eventually this market is going to get caught up in a severe bearish trend taking this market much lower than where we are today. We will probably re-test the lows set in 2009 at some point in time.

The AEX has taken out the recent highs of the bull move that started in June this year which is good news, but this short term rally looks like it is could be losing momentum and has nearly run its course I think.

Other interesting features are that the market has immediate support at 340 and there's also a gap in the daily chart between the 28th and the 29th of November at the 334-335.5 area. This will be an interesting target when we get a correction.

Trading thoughts: My bullish trading idea will need some patience because we will need a trigger, and despite the new highs this trigger isn't in place. I don't consider breaking the 340 level the way it did as anything to get very excited about. But if we can get a pullback and then new highs, that would most certainly be something to be happy about, since it would set up a move that should at least target 354. That is the 0.618 the length of the move between June and August from the bottom on the 16th of November (I count the August peak as the top of that move). The next target would be 376, which happens to be in line with the bull market high of the bullish move since 2009.

AEX daily bullish set up,

AEX Daily 121209

With that said, I think that the market can continue its slow grind higher for a few more points. There are a couple of negatives to the picture that makes it very important to wait for a pullback and a break to new highs before going long, because the short term bearish scenario is still a real possibility. The coming pullback targets the gap at 334-335.5, which at this point would coincide with the 38.2 % retracement of the last leg higher. Too deep of a pullback would ignite the scenario below, which is also the reason I want to wait for the trigger.

AEX Bull Trap:

AEX Bull trap










The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail