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Despite German election the DAX outlook remains positive


DAX futures (Dec 2017 contract is FDXZ7, continuation contract is FDXc1)

 

Technically the DAX remains a buy into weakness, however the reaction to the uncertainty of the German election result could muddy the waters a touch.

The market has been pulling higher effectively in a “rising wedge” and the early drop back in DAX futures today simply looks to be another unwind into support.

  • Holding above 12,500 support which was the basis for last week’s higher low will be key to continuing this positive outlook of the wedge.

Momentum indicators are still strongly configured with the RSI above 60 and Stochastics holding well above 80.

The hourly chart shows an opening gap lower from Friday’s close at 12,605 whilst it is interesting to see the hourly RSI again bouncing from 40 and the hourly MACD lines back at neutral which is where the buyers have previously been tempted.

If the initial fallout of the German election can be contained then this will again be a buying opportunity to test higher.

  • Friday’s high at 12,637 is initial resistance protecting the July high at 12,655.

 


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