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