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DAX needs to hold the morning rally or risks profit-taking

DAX Xetra (cash index)

For the past few sessions the DAX has been looking at the March and February highs for a breakout, but so far the bulls have been rebuffed.

Can the bulls drive a breakout?

The concern is that the longer the market struggles, the more likely that the bulls will tire and run the risk of taking profits on the April rally.

This concern is beginning to show on the Stochastics which have just started to top out.

This could be a one-off of the momentum indicators, with the RSI steady in the mid-50s and MACD lines rising, but the Stochastics are a sensitive momentum indicator and could be a signal of waning momentum.

  • The early market rebound today which has put a low in place at 12,375 needs to start to build once more, especially after yesterday’s solid bear candle.

It is interesting to see that in this recovery the bulls are also still yet to post a close above the March high of 12,360, changing this today would be an improvement and help the confidence of the bulls.

The hourly chart shows momentum configuration still positive with the hourly RSI rebounding again above 40, hourly MACD lines above neutral whilst the hourly Stochastics have just crossed back higher this morning.

  • The reaction low at 12,257 is key near term now in order to maintain the trend of higher lows.
  • Resistance at 12,524 now protects the 12,600 key February high.

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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.