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How to play the DAX following the key downside break

DAX Xetra (cash index)

After the recovery failed to ignite, yesterday’s key break down below the pivot support at 12,600 has been a key move.

This completed a double top pattern and implies around 600 ticks of additional correction now.

Breaching the previous June low of 12,547 on not only an intraday basis but also a closing basis really does reflect a concerning shift in sentiment now.

Momentum indicators are now tracking lower with the RSI closing yesterday below 40 (lowest since late March), MACD lines on the brink of falling below neutral and the Stochastics also into bearish configuration.

The reaction of the next few sessions will be key now as momentum indicators suggest that rallies are now a chance to sell.

  • The old pivot around 12,600 becomes a basis of resistance and the reaction high at 12,760 is now a key lower high.
  • An early bounce today could now give another selling opportunity and how the market reacts to 12,600 will be key.
  • Yesterday’s low at 12,473 is initial support but a test of the late April low at 12,312 is next real support.
  • Another lower high in the range 12,600/12,760 would be a real concern for the medium term outlook.


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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.