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DAX dropping back, needs to hold 12,495 today


DAX futures (Dec 2017 contract is FDXZ7, continuation contract is FDXc1)

 

The bulls just had their wings clipped yesterday as the early gains were unwound, but as things stand the outlook remains positive and weakness on the DAX remains a buying opportunity.

However, an initial slip back this morning has broken below yesterday’s low at 12,523 and ends a run of three days of higher lows.

Daily momentum indicators retain a positive configuration but there is a caveat, in that the market could be beginning to consolidate in front of the key FOMC decision tomorrow and this could turn in to corrective drift.

On a medium term basis, the improvement in the outlook continues to suggest corrections will be bought into and there is a strong band of support between 12,300/12,504.

The question for today therefore is whether the consolidation in the run higher is the precursor to a minor correction.

Posting two consecutive red “bear” candles after a run of eleven green “bull” candles could begin to weigh on the market, whilst today’s early move suggests the sellers are just taking on some control.

  • A move below Friday’s low of 12,495 would begin to increase the corrective pressure with support at 12,464 key near term.
  • Resistance initially is 12,565 with yesterday’s high of 12,604 preventing a move to test the July high at 12,655.

 


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