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DAX under pressure as risk appetite plunges

DAX Xetra (cash index)

A near term recovery has been aborted as the market has retreated in the past couple of sessions amidst a move away from riskier assets.

In this environment of concerns over trade tariffs and what will come out of the G7 meeting, the export heavy DAX is likely to suffer, and that is exactly what is happening.

A mini uptrend channel has broken down with the resistance around 12,918/12,925 forming a barrier to gains this week.

A bearish candle yesterday has been followed by an opening gap lower today and now this move becomes key for the medium term outlook.

Can the bulls continue to hold on to the key breakout support around 12,600?

The late May correction hit an intraday low of 12,547 but the base pattern that formed on a breakout above 12,600 held the neckline support into the close and clearly this is a level that the market is looking at now.

  • This morning’s initial gap lower into the 12,600s is holding the neckline support again but a close below 12,600 and/or an intraday move below 12,547 would begin to seriously question the sustainability of the renewed medium term recovery of May.
  • The gap is open at 12,760 and still needs to be filled but there is now resistance 12,729/12,760 as overhead supply.

How the market reacts to this resistance could be key now in the coming days.

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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.