DAX Xetra (cash index)
Yesterday’s sharp rally has shifted sentiment on the DAX but the big question is whether a bottom is now sustainable.
The DAX closed over 200 ticks off session lows, but also the market was off the highs of the day too and there is an uncertain look to trading early this morning.
Essentially this rally was not driven by technical, but the newsflow regarding Trump’s policy on China.
The rebound from 12,125 has broken the eight day downtrend (which was always going to be hard to sustain, and any sense of consolidation would have broken it), however, technically there is still a negative configuration on a medium term basis now.
The tick higher on momentum indicators could be a signal for a near term pull higher and if the market can pull together for a positive session today there is the potential for a rebound, however it would still be within the backdrop of a larger negative outlook.
Breaking down below 12,600 implies 12,000 in due course and with the MACD lines so negatively configured now, rallies will be seen as a chance to sell.
However, the hourly chart shows that already this is just an unwinding of recent selling pressure and the risk is that this just helps to renew downside potential.
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