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.
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).
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