As they say on the London underground railway/Tube/transit system..."Mind The Gap"...this is when the doors open at certain stations and there is a gap between the station platform and the edge of the train and a recorded message warns you of the perils of falling down the gap.
In technical analysis and in particular median/reaction lines gaps are extremely powerful. No one understands exactly why markets gap but i have observed that they do so at significant reaction line and significant/critical median lines that are resisting/supporting price. There is always the knowledge that gaps in markets are always filled. The majority are filled quickly others may take months or years and represent critical turning point in market structure.
So imagine my delight over the last holiday week where with extremely light trading we have seen all equity markets gap-up. My long term view is undecided and i will offer my particular technical insights before next monday. However I am certain that as the curtain rises on 2012 we are not going to head north yet and that many questions have to be faced regardless of the USA's economic resiliance and encouraging data form the last quater.
My gut impulse is that we will fill this gap NOW. We still have gold/equities and currencies/USD moving in tandem and until we see the uncoupling of these markets perhaps in the second half of 2012, i am taking my lead from evident weakness in other markets to support my views on the DAX. A li nk to the trade setup for this trade will be posted here but look at the short stochastics ribbons in the 240 min TF ( not shown here). Also based on my own experience that price must hit the CL of all classic andrews forks drawn off both/all available lows and the fork with the highest angle, there is a failure here in multiple equity indices..eg in the 60 min TF DAX(H12) 5624.50( 19 dec) as P0,5974.50 as P1(21 dec) and 5773.50 as P2 on 28 dec.
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