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Is the DAX rebound simply another chance to sell?


DAX Xetra (cash index)

Can the bulls maintain the technical rally and prevent another rebound from being sold into?

Having added 120 ticks, yesterday’s positive session was a strong bull candle but not decisively so, after giving up 40 ticks from the day high.

However, the market has continued to push higher again this morning and the recovery is still developing.

Despite this, the big caveats are overhead.

  • There is still considerable near term overhead supply between 12,400/12,500 and the momentum indicators are still just unwinding the recent selling pressure.
  • The resistance of a three week downtrend falls today at 12,525 and this adds to the pressure bearing down on the rally.

For now, this is a near term reaction higher but the big test will be how the bulls react to another bear signal.

The hourly chart shows that the rebound has already unwound the previous stretched sell off and is now around levels where the sellers will be eyeing their next opportunity.

  • There is support at 12,250 which if breached could be the trigger for the floodgates to open for a test of the support band 12,104/12,120.

 


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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.