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Bulls continue to build their recovery case on the DAX


DAX Xetra (cash index)

The rally of the past few sessions continues to gains traction and is now up around a key crossroads in its development.

Is this going to be a sustainable recovery that continues well into next week?

The answer could come in how the market responds to the resistance band of the old June/August lows 12,104/12,120.

Yesterday’s attempt to breach this resistance was rebuffed and the market only ended with a rather drab positive session.

Another gap higher at the open today is testing this band of resistance again early today and if we see a close above 12,130 (yesterday’s high) then it would be a real signal of intent from the bulls.

  • This would then decisively open the run higher as there is little significant resistance until 12,300/12,400.

Momentum indicators are certainly turning more positive, with the confirmed buy signal now on the Stochastics, RSI tracking higher above 40 and should there be a bull cross completed on the MACD lines it would be a real confirmation on the recovery.

The picture of the recovery to buy into weakness really comes through on the hourly chart.

A very well defined double bottom base pattern came with a move above 12,039 which has had an almost perfect pullback to the neckline of the breakout.

  • This base implies 12,190 as a target, leaving good support around 12,039.

Hourly momentum indicators are also continuing to improve and suggest weakness is a chance to buy.

 


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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.