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DAX falls over again but is it just another chance to buy?


DAX Xetra (cash index)

Having been positively configured on a breakout to multi-month highs earlier this week, the move has turned on its head, with a correction which is threatening the bullish outlook.

A bearish candlestick yesterday with a 185 tick loss on the day (-1.5%) has been followed by another gap lower this morning.

A 5 week uptrend has been broken, although this comes within the bigger 12 week channel, and the risk is now for a retreat back towards the channel support currently around 11,420.

The bulls will continue to console themselves with the market trading above the 11,370/11,415 key medium term pivot band, but sentiment is now threatening corrective.

How this develops now in the next session of two will be key, as for now, there is a positive medium term configuration on RSI (still above 50) with MACD and Stochastics lines still positively set up even though they have all ticked lower near term.

  • There is an old pivot at 11,555 on the hourly chart which is an initial gauge of support and if this is decisively breached there could realistically be a retreat back towards 11,370/11,415 again.
  • How the market also responds to this morning’s gap lower will be key, and a failure to close the gap at 11,600 will be a signal to suggest the near term correction is being accepted.
  • A move back above 11,677 would re-open the recent high of 11,826 again.
  • There is minor support at 11,487.

 


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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.