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DAX looking to build a recovery but still finding resistance


DAX futures (Mar 2018 contract FDXH8, continuation contract is FDXc1)

The oversold technical rally has stalled a touch this morning but it is interesting that a positive candles are now beginning to form.

Looking at the DAX after a few days of not having analysed the market, the first issue to consider is whether this is merely a dead cat bounce (albeit an impressive one so far).

Opening so strongly lower on Tuesday only to then trade higher and continue higher again yesterday is a positive reaction after such a precipitous decline.

A major factor here will be how the market reacts around the old key support at 12,730 from the January low.

Also consider the Fibonacci retracements of the decline from 13,596/12,070.

38.2% Fib has been a barrier in the past two sessions at 12,653 and needs to be overcome to suggest the bulls are building something sustainable.

  • This leaves a key resistance band in the coming days around 12,650/12,730 that needs to be breached.

There is a degree of settling down of the recent volatility today (certainly compared to recent wild sessions), but even then the market is still around 80 ticks lower.

  • The 23.6% Fib retracement at 12,430 is a basis of support, whilst on the hourly chart the 12,400 area is supportive.

Concern for the bulls comes with the hourly momentum though which has the RSI still failing around 60, whilst the MACD lines are failing around neutral.

  • A move back below 12,400 would be a concern again that the lows may be re-tested.

 


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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.