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DAX rebounds but can the bulls build a recovery?


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.

  • There is initial resistance at yesterday’s high of 12,440 to consider and then overhead supply 12,473/12,600.

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.

  • The 12,440 resistance could have a key say in how long this technical rally goes for.

 


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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.