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DAX under pressure with a potential breakdown eyed


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.

  • The hourly chart shows the added importance of the support around 12,400 which if broken also completes a small top pattern that would imply a further 240 ticks of correction.
  • Subsequent support is 12,285.
  • The bulls need to rally above 12,489 initially as resistance to try to regain some of the recent upside momentum.

 


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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.