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DAX bulls bounce back, but will they last?

DAX Xetra (cash index)

The Wall Street rebound has certainly boosted European sentiment on equities and the DAX is certainly taking part in the rebound.

As such the DAX continues with its higher volatility reactions to the market moves.

Underperforming when risk aversion hits, but outperforming as sentiment recovers (at least versus the FTSE 100 anyway).

The move today has driven a sharp opening gap higher which as yet remains unfilled at 12,011 (around the near term pivot around 12,000).

The rebound is now pushing through the resistance at 12,162 in a move that has broken a near three week downtrend.

However there is the bigger matter of a five week downtrend channel to now negotiate.

Can the bulls sustain a recovery this time?

Momentum indicators are improving within still negative medium term configuration, but this is clearly a situation that the bulls will be encouraged by now.

  • A decisive close above 12,162 would be the next stage for the recovery and then a move above the lower reaction high at 12,344.

Also watch for the hourly RSI to push above 70 for the market to be taking on an increasingly positive outlook on a near term basis.

  • Initial support is now 12,070/12,095 above the 12,000 pivot.

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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.