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Is DAX beginning to find support for a recovery?


DAX Xetra (cash index)

Is the selling pressure beginning to subside?

That is the question DAX traders will be asking themselves after a couple of weeks of consistent and decisive moves lower that have broken key technical levels.

The DAX posted a long legged Doji candle on Friday (which included a marginal gain of 4 ticks).

This was the first session since the selling pressure really ramped up through last week, where the DAX had not closed towards the low of the session, and included an intraday rebound of 70 ticks from Friday’s low at 11,888.

There has been an early slip again today but once more it seems as though the selling pressure is being contained.

This all comes in the backdrop of the RSI which has dropped to 30 but is now looking medium term stretched as this is where the bulls have tended to return throughout 2018.

Looking on the hourly chart there continues to be this sense that the momentum indicators are hinting at a slowing of the selling, with a mild positive divergence on the RSI, whilst MACD lines have now crossed higher.

If the hourly RSI can move into the mid-40s it would suggest there is a developing positive momentum.

  • Initially the resistance at 11,990 needs to be overcome, whilst the resistance of the old key floor around 12,100/12,120 will be the main impediment to a recovery.
  • Primarily also the support needs to build, ideally now from 11,888 and to form a higher low above 11,726.

Today’s session could therefore be an important step.

 


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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.