DAX Xetra (cash index)
After the rally was unceremoniously brought to an end yesterday with a sharp move to the downside that again effectively reiterates the importance of the pivot around 12,600.
The rally has sold off from Tuesday’s intraday high at 12,640 and the reaction to the move lower will now be a key feature of near term trading.
After such a strong decline, that closed below the previous breakout (which had become supportive) at 12,440 the bulls need to quickly reclaim this level as a gauge for the outlook now.
The concern is that already markets are showing that the early rebound today is not tempting the bulls back in.
Momentum indicators rolling over in the wake of the strong sell-off yesterday, so the bulls will need to react quickly to prevent the outlook turning negative again.
Trading below all the moving averages again is a concern, whilst yesterday’s low at 12,398 is also now important.
Losing the support of yesterday’s low and posting another negative candle today would validate the sell-off.
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