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DAX finding support today, but can it last?

DAX Xetra (cash index)

As the market looks to stabilise this morning, can the bulls start to rebuild for a sustainable recovery once again?

The outlook on the daily chart looks rather precarious as although there was a rebound from around the early March low on Friday, there is still considerable overhead supply to overcome. Initially this means breaking through a pivot around 12,000 which has been building over the past six weeks.

Although the market has opened higher today, unless this pivot can be breached then it will still just look like a dead cat bounce.

Momentum indicators retain a deteriorating configuration with the MACD lines crossing lower and the Stochastics accelerating.

On the hourly chart there is more of an improvement that the bulls can point towards, with two tests of the 11,830 low seen on Friday actually holding fairly well (the traded low was 11,819). This leaves the prospect of a small positive divergence on momentum and the Stochastics on the hourly are threatening a bull cross that would improve the immediate outlook.

  • However, the hourly chart also shows the importance of the pivot around 12,000 and a positive move this morning would though at least need to break above this to suggest the bulls are gaining momentum.
  • A decisive move above 12,000 would complete a small base and imply 180 ticks of recovery and bring the overhead supply between 12,162/12,183.
  • In the absence of a move above 12,000 then the bull move will likely fade again and retest Friday’s low at 11,819 with a close below being very bearish now.

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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.