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DAX consolidation beginning to weigh on the recovery


DAX Xetra (cash index)

Whilst Wall Street markets may be hanging on to their recovery uptrends, the loss of upside momentum and associated slip back on the DAX has now resulted in a trend break with the rally in doubt.

Yesterday’s mild loss of just over 20 ticks has broken a mini-uptrend and the consolidation in today’s session (not to be unexpected given the US mid-terms are today).

The consolidation is also now beginning to have an impact on momentum which has lost impetus in the past couple of sessions, with the RSI plateauing in the mid-40s, and Stochastics also threatening to roll over only just above 50.

This is a bad time for these indicators to be losing momentum, being that this comes where rallies are considered to be a chance to sell.

  • It also increases the importance of the near term pivot support band 11,445/11,500 holding firm.
  • If this band closes to the downside (a breach of 11,400 would confirm this) then the recovery will have been lost and the most likely course would be for a retest of the key low at 11,051.
  • The fact that this is still all playing out under the key long term overhead supply 11,726/11,865 with last week’s high at 11,690 will increase concern for the position of the recovery.

It seems that the US mid-term elections will need a risk positive outcome in order to help the now struggling recovery.

 


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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.