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Can the DAX bulls continue to hold on to bullish trend channel?


DAX Xetra (cash index)

A degree of consolidation has set in for the DAX after last week’s decisive breakout above 11,000 has unwound back towards the pivot.

This is now becoming a key moment for the near term outlook.

  • The uptrend channel of the past four weeks is supportive at 11,025 today whilst the basis of a pivot for the past few months is around 11,000 and remains supportive.

However, if these were to be broken down then the bulls will be sitting far less comfortably.

Perhaps in a similar move to the September rally, the Stochastics are now beginning to tail off and threaten a sell signal.

This would though only be the first of the momentum signals to turn corrective again, with the RSI holding well above 50 still and MACD lines rising on the brink of a move above neutral.

So for now the bulls are still in control.

  • However, trading with a 10,000 handle would be a concern now and there is still Friday’s breakout gap open at 10,929.
  • A break below 10,788 remains a key higher low for the recovery now that needs to hold for the bulls.

Despite this though, the supports of the pivot and the trend channel are holding and the bulls are happy to support weakness again this morning.

  • There is initial resistance from yesterday’s high at 11,135 which is protecting Friday’s high at 11,217.

 


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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.