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DAX recovery needs to show more to prevent the rally fading


DAX Xetra (cash index)

Can the bulls continue the recovery that set in motion on Friday, or is this going to simply be another near term rebound that gets sold into?

A mini two week downtrend has formed as the market has corrected back to the medium term key breakout around 12,600.

A rebound session on Friday and further gains today have opened the prospect of a recovery, but the market has dropped back from an initial test of the two week downtrend this morning.

There is overhead supply at 12,800/12,918 that is resistance that needs to be overcome.

The concern is that the formation of candles (admittedly today’s candle is around an hour in progress) suggests that initial rallies are failing to be sustained.

Daily momentum indicators are though looking to pick up once more, with the Stochastics crossing higher being the main positive to consider.

Furthermore, on a medium term basis the neckline support around 12,600 broadly held firm last week (Thursday’s spike low was 12,547) which is a positive and could now become a basis of support to build medium term positions from.

  • The hourly chart shows that more needs to be done to convince from the bulls, but the support at 12,692 will be important to watch near term.
  • Initial resistance is today’s high at 12,846.

It could be a key phase for the development of renewed positive intent.

 


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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.