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Reaction to the gap fill is key near term for the DAX

DAX futures (Dec 2017 contract is FDXZ7, continuation contract is FDXc1)

Once again the DAX bulls have been unable to drive a breakout and the market is dropping back from key near term range resistance once more.

The gap higher that came with Friday’s attempted breakout has now been filled as futures dropped back yesterday and have continued lower today.

Now the question is whether this is a gap that is “filled” or a gap that is “closed”.

  • A filled gap at 13,100 would be a drop back that is bought into today to end the day back above 13,100, which would be seen as a positive development.

However, now the market has dropped below 13,100 in the early moves today and keeps falling, this would be a negative “closing” of the gap.

An improvement in the daily momentum indicators has tailed off as the early dip away has hit.

  • Closing the gap would once more suggest the decisive breakout above 13,210 would be unlikely near term and mean the market would be neutral within the 12,965/13,100 range within the key 12,806/13,244 four week trading band.
  • However if the bulls can hold for a rebound back above 13,100 then the outlook will remain positive for an upside breakout.

Today’s closing level could now be key.

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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.