DAX Xetra (cash index)
Selling pressure has really taken hold of the DAX in the past week and a half and there is a real sense that there is further weakness that will be seen in the coming days and weeks now.
The steep downtrend of the past eight sessions continues to be a drag on the market and now comes in today as a basis of resistance at 12,438.
However this trend is unlikely to last, seeing as it is falling at over 100 ticks per day, however the breakdown below 12,600 was a key medium term move that now implies a move back towards 12,000.
With a pullback rally on Friday failing around the neckline, it is clear that rallies are now a chance to sell.
Momentum indicators reflect this too, with the MACD lines accelerating now below neutral and the Stochastics in bearish configuration.
The RSI is in the mid-30s at three month lows but also retains downside potential too, meaning that any unwinding moves are a chance to sell.
Subsequently after yesterday’s huge bear candle the market has bounced early today, but again, this is likely to be a selling opportunity.
It will certainly be interesting to see how far this rally goes before the sellers resume control.
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