DAX Xetra (cash index)
The bulls took a big leap forward with the decisive breakout above 11,000 last week, how they respond to weakness will now be key.
An uptrend channel has formed in the past few weeks and is supportive today at 10,940, whilst the old pivot at 11,000 is a significant basis of support that the bulls now need to hold on to.
With the US on public holiday yesterday there was something of a muted session in a slip back, a move which has continued to drift lower today, but will this just be seen as a chance to buy?
Momentum indicators are now strongly configured and point towards weakness being a chance to buy now, with the RSI holding in the high 50s, Stochastics above 80 and MACD lines still rising strongly.
The hourly chart shows the slip yesterday is simply helping to unwind the stretched momentum from last week’s run higher and should be eyed as an opportunity.
A decisive close under 11,000 would though now be a significant disappointment, but it would need the channel to be broken too for the outlook to revert again.
Anything around 40/50 on the hourly RSI is seen as an area where the bulls are forming support.
- Today’s initial low at 11,069 is supportive above the main support around 11,000.
- Resistance remains 11,217 from Friday’s high before an old reaction high at 11,567.