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DAX bounces but the sellers seem to be ready


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.

  • There is minor breakdown resistance at 12,472 and the hourly chart shows the hourly momentum could do with a move to unwind, but between 12,472/12,600 is an ideal sell zone now.
  • Yesterday’s low at 12,270 is unlikely to be the low of this bear phase and a retreat to the implied target of 12,000 is still preferred.

It will certainly be interesting to see how far this rally goes before the sellers resume control.

  • The early move has already struggled for traction and initial resistance is at today’s traded high of 12,355.

 


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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.