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DAX bulls fail again as consolidation pattern takes hold


DAX Xetra (cash index)

Once more the bulls have been unable to grasp control as another intraday rally has failed to be confirmed.

The market is now in an intriguing phase of trading within this consolidation.

Is this a case of the bulls gradually feeling their way back to the driving seat, or could it turn into a rising wedge (a bearish technical pattern).

In the past week the market bottomed at 12,493 and has been busy building a run of higher lows to claw back above the old pivot at 12,600.

Holding above this pivot is key on a near term basis now.

Yesterday, we discussed how the underside of the old uptrend channel was a basis of resistance and the market has been bumping up against this in recent session, but repeatedly unable to break higher.

  • We also discussed how the pivot around 12,700 was limiting upside and although the market hit 12,738 before dropping back, this is still a basis of resistance to watch.
  • The early gap lower has been filled quickly today but the market needs to hang on to the 12,600 pivot into the close to prevent another negative candle formation and the sense of failure from progressing.
  • If the higher reaction low at 12,538 were to be triggered then this would be a worrying signal for the bulls.

The hourly chart shows how the recovery in the past week has still got more to do to turn momentum back positive again, but if the little trend (which comes in around 12,570 this morning) is broken this would be a concern now.

So, for now this is a consolidation pattern that we are no closer to knowing the breakout from.

 


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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.