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How far can the DAX bulls take this rally?


DAX Xetra (cash index)

The recovery on the DAX has progressed this morning as the market has pulled over 100 ticks higher in early moves.

However, the bigger tests are ahead for the near to medium term recovery.

The market has though picked up well from last week’s low of 12,120 and effectively we see Friday’s dip to 12,135 which induced a rebound coming in as a higher low.

  • This morning’s move is now through initial resistance of 12,295 but there is more considerable resistance coming in a band at 12,400/12,500 which is overhead supply left as the July recovery rolled over.

There is a tick higher on momentum indicators with the RSI into the 40s again (which is positive near term) and the Stochastics edging higher.

The way the market is moving also suggests that there could be further legs in this near term bounce.

  • However with a three week downtrend falling at 12,547 there is a sell zone starting above 12,400 to prevent the market from moving too much higher.

For now, momentum also looks to simply be unwinding some of the aggressive selling of the last week or so.

The key will be how the market reacts to another bear signal.

  • The hourly chart shows an initial support now at 12,245.

 


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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.