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DAX under pressure and close to a key breakdown

DAX Xetra (cash index)

Seemingly one bearish candle and suddenly the whole positive outlook for the DAX is coming under pressure.

Can the bulls hang on to the trend channel?

Despite yesterday’s move above resistance at 13,140 the market has opened lower today and the move seems to be sharply down to test the support of a seven week uptrend channel.

Channel support comes in at 12,970 and has been tested early today.

The market has now retreated into the belly of the support band 12,918/13,034 which is key for the medium term recovery.

Concern in this corrective slip today comes with the fact that momentum indicators are ticking lower, with the RSI breaking its confirmation uptrend of the past eight weeks.

If this move lower turns into a second day now there is also likely to be a bear cross formation on the MACD lines to consider too.

  • The key support to watch will be the 12,918 reaction low as a breach would be the first key reaction low within the trend higher having been broken.
  • The bulls will look to fight as this session continues and a close back above 13,034 will be at least some consolation.

However the hourly indicators are slipping back and how the deterioration in the MACD and RSI develops today would be a key factor.

  • The correction back has left resistance at 13,204 with gap resistance at 13,170.

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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.