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Is the DAX rebound beginning to struggle at resistance?

DAX Xetra (cash index)

A recovery in the past few sessions has unwound some of the recent oversold position, but is the move anything more than just another chance to sell?

The risk appetite around global equities has been less negative as the US/China rhetoric has improved, allowing the market to rebound but the big test for the DAX is overhead with the resistance around 11,000.

  • The key breakdown of old support has turned new resistance at 11,009 along with the underside of the old long term uptrend around 11,100.

Momentum indicators are in the process of unwinding on a near term basis, but will this just renew downside potential?

  • Today’s initial slip back from a high of 10,988 is a concern and is now testing the recovery uptrend on the hourly chart.
  • A move below the higher reaction low at 10,861 from yesterday’s session would constitute the recovery failing.

Watch the hourly indicators, with the RSI potentially rolling over around 60 and MACD lines losing impetus around neutral.

A confirmed sell signal is threatening on the hourly Stochastics too.

  • Below 10,861 opens 10,780 with the key low at 10,585.

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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.