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DAX bulls need to react to prevent selling pressure spreading

DAX Xetra (cash index)

There are some significantly mixed signals on the DAX after a sharp bear candle aborted the recovery uptrend yesterday and the rebound has been scuppered.

Losing almost 200 ticks yesterday took the market back below a pivot around 12,284 and below the 23.6% Fibonacci retracement of the big 13,597/11,831 sell-off at 12,248.

This means that unless the bulls can reclaim these levels today the outlook will turn significantly more corrective again and the key lows could come back into view at 11,830.

The reaction to a big down day is always key and early in today’s session the market is just consolidating the sell-off.

There is though a concern that the momentum indicators have lost their recovery momentum (not surprising given the strength of yesterday’s selling) with the Stochastics crossing lower and the RSI falling over under 50.

The bulls will notice that the traded low yesterday bounced off the old downtrend which is a basis of support, and there will now be added focus on the low at 12,162.

Also, on the hourly chart there is also a move to unwind the RSI and MACD lines without them turning negatively configured yet.

This all adds to the importance of how the market responds today.

  • A breach of 12,162 re-opens the support around 12,000.
  • Resistance is at the 12,284 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.