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Can the DAX bulls react to an early setback?


DAX Xetra (cash index)

Renewed tariff threats and the DAX has dropped back again early today.

The issue will be how the bulls can respond now and whether the recent recovery phase has already played out.

It now means that price action in the next session or two will be seen as key to the outlook.

  • After the recovery in recent sessions has started to see the market closing back above 12,100, a failure in the band of overhead supply between 12,100/12,130 would be significant concern.

There is a developing improvement in the momentum indicators, but a couple of negative sessions could really put the skids on this recovery.

As yet there is also still no bull crossover on the MACD lines, and if the Stochastics start to roll over there is a risk that the bulls will lose faith in the recovery.

  • The intraday gap lower needs to close the gap at 12,075 (from Friday’s low) and this would leave today with a positive candle (even if the close is lower).
  • The hourly chart shows the market has slipped back to the neckline of a small base pattern at 12,040 which is a basis of initial support and if this is bought into then the bulls will be showing a strong reaction for buying into weakness.

A closing breach of this neckline support would be a deterioration in the outlook now.

 


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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.