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DAX again struggling amidst increasing consolidation

DAX Xetra (cash index)

Despite global equities pulling strongly higher, there is a continuation of the consolidation that has persisted for the DAX over the past week.

A run of neutral, bordering on negative candlesticks has broken the uptrend channel and momentum indicators are now threatening lower.

Once more this morning we see, initial gains are not being held and another negative candle is threatening in the consolidation.

This is impacting negatively also on momentum with the Stochastics now tracking lower, whilst the RSI is beginning to fall away and MACD lines are topping out.

There is still going to be a positive medium term outlook on the DAX whilst the market is trading above 11,000 which is a key pivot and currently support, however a close below 11,149 would be a warning signal now.

A couple of weeks ago there was a gap higher from 11,149 which has been subsequently filled, however the market has tested lower in each of the past three sessions only to maintain the fill.

  • Once more there is a test below 11,149 is being seen today and if this were to close below it there would be a seven session closing low and a negative bias would certainly be developing within the support above the 11,000 pivot.

The hourly chart reflects this growing concern, with the hourly RSI falling below 40 for the first time in over a month, whilst the hourly MACD lines are also below neutral.

  • Intraday resistance is growing at 11,210 which is below the recent high at 11,321.

For now this remains a consolidation, but is one that the bulls need to be cautious of.

  • Support is initially at 11,051.

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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.