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Early DAX rebound doing little to suggest bull confidence


DAX Xetra (cash index)

After the huge sell off of the past week, there has been a minor rebound this morning, but for now, this move looks to be little more than noise within the sharp correction.

The acceleration in the move lower of the past few weeks has taken the market right back towards the key June low again at 12,104.

With an intraday bounce from 12,120 during yesterday’s sell-off, the market has ticked higher again today to leave the support so far intact.

However momentum indicators remain strongly corrective and also with further downside potential.

The MACD lines are gaining traction having just crossed lower below neutral, whilst the RSI is in the mid-30s.

Furthermore, considering the attempt to regain some risk appetite across markets today, the early rebound has been fairly tepid and does not suggest the bulls are especially confident to drive a recovery.

The reaction to a big bear candle is always important and there has been little to suggest any sustainable move higher this morning, currently looking to be little more than a dead cat bounce.

On the hourly chart, the inference on momentum is that a recovery is a move to unwind an oversold position.

  • There is resistance initially around 12,300 so there is room for a bounce, but the overhead supply is growing now between 12,300/12,400 which will be seen as a new sell-zone for what is a likely test of 12,104.
  • A close below 12,104 would open the March low at 11,726.

 


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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.