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DAX consolidates but the outlook has shifted


DAX Xetra (cash index)

Can the bulls respond quickly after the decisive downside break yesterday?

Trade tensions between the US and China were certainly a key driver of the move lower, but these periods of bearishness have historically not lasted too long and there will be an eye on how the bulls can now react.

The uptrend channel has been broken, so the outlook is no longer bullish, whilst the underside of the channel now becomes a basis of resistance, currently around 12,700.

An old medium term pivot at 12,600 will though be seen as a gauge and the medium term outlook is increasingly mixed now.

This comes with the moving averages all having converged towards neutral between 12,620/12,665.

  • If the market can now build on yesterday’s low at 12,493 then there will be limited real deterioration in the medium term outlook, this would though change below 12,400.
  • The range between the pivot at 12,600 and near term breakdown at 12,700 is now near term resistance.

A positive reaction has been seen early today which suggests that the immediate selling pressure has been contained, but this band of resistance overhead needs to be overcome to regain some sort of positive momentum.

 


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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.