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DAX breaking higher but should it be chased?


DAX futures (Dec 2017 contract is FDXZ7, continuation contract is FDXc1)

 

DAX futures are breaking higher once more as the market is now leaving behind the old resistance at 12,655 to re-open the highs from June.

Yesterday’s session not only closed above 12,655 but also the bulls used the breakout as support for the intraday move higher.

  • This is now helping to bolster the support at 12,600/12,655 whilst also breaking higher from the recent rising wedge.

The bulls continue to use corrections as a chance to buy with momentum indicators strongly configured.

The RSI is pushing above 70 now and although this is not unprecedented (the RSI spent two weeks above 70 in May) but this could still act as a handbrake on the rally.

Despite this, with other momentum indicators so strong, any unwinding move is still a chance to buy.

The hourly chart shows the hourly RSI above 70 also and this does not tend to continue for too long before an intraday correction.

Any unwinding move to 40/50 on the hourly RSI would be seized upon by the bulls.

  • Initial support is 12,669 with 12,637 also a breakout level on the hourly.
  • Next resistance is 12,825 and then the contract (and all time high) at 12,935.

 


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