DAX Xetra (cash index)
After a decent rebound in the early part of the week, yesterday’s negative candlestick on the DAX serves as a warning that a potential recovery is not a certainty.
The fact that the rally high came at 11,848 which is within the overhead supply of 11,726/11,865 of the old key market lows, is also a concern.
If this resistance is not quickly removed then the selling pressure could begin to weigh once more.
Momentum indicators are unwinding the big sell-off of recent weeks and within this there is still further room to run within a recovery (especially considering the move away from medium term trendlines and moving averages.
Today’s early bounce higher is encouraging the bulls again, but this move needs to be sustained today.
An intraday failure at a lower high (under 11,848), especially if this came with a negative candlestick would be a real blow to the prospects of a recovery.
On the hourly chart there is still decent hourly momentum, but the underside of the old downtrend channel (which has been a basis of limit to rallies in the past week and a half).
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