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DAX bulls remain in control, looking at key resistance


DAX Xetra (cash index)

A breakout above 12,440 has improved the near term outlook and now put the market in line for a key test of the overhead supply at 12,600.

As momentum indicators improve, this will be the key test on a medium term basis.

Since the market broken below 12,600 in the February sell-off, a pivot has formed at 12,600 with consistent turning points around the pivot.

The bulls subsequently have a key test overhead.

Coming into the test the momentum of the recovery has been picking up with the Stochastics accelerating higher and the MACD lines showing a bull cross.

The RSI around 50 is also suggestive of a crossroads.

Candles have been unspectacular and this could reflect the concern of the overhead supply.

Friday’s mixed candle has again gapped higher early today.

  • This means there is a gap at 12,508 that needs to be filled still, but there is also a gap at 12,350 that was never filled, so the bulls are in control here.

Despite this though, there is a cautious nature to this run higher, however, if 12,600 can be overcome then the bull confidence will increase significantly.

The hourly chart shows the hourly RSI close to 70 again so this could limit immediate upside and also give a better entry point for a test of the resistance (would also give rise to a possible filling of the gap, which would be a positive move).

  • A near term uptrend is also supportive around 12,440 whilst the rising 21 hour moving average at 12,455 is also a basis of support now.
  • Above 12,600 opens 12,760.

 


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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.