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You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Bulls continue to build their recovery case on the DAX

DAX Xetra (cash index)

The rally of the past few sessions continues to gains traction and is now up around a key crossroads in its development.

Is this going to be a sustainable recovery that continues well into next week?

The answer could come in how the market responds to the resistance band of the old June/August lows 12,104/12,120.

Yesterday’s attempt to breach this resistance was rebuffed and the market only ended with a rather drab positive session.

Another gap higher at the open today is testing this band of resistance again early today and if we see a close above 12,130 (yesterday’s high) then it would be a real signal of intent from the bulls.

  • This would then decisively open the run higher as there is little significant resistance until 12,300/12,400.

Momentum indicators are certainly turning more positive, with the confirmed buy signal now on the Stochastics, RSI tracking higher above 40 and should there be a bull cross completed on the MACD lines it would be a real confirmation on the recovery.

The picture of the recovery to buy into weakness really comes through on the hourly chart.

A very well defined double bottom base pattern came with a move above 12,039 which has had an almost perfect pullback to the neckline of the breakout.

  • This base implies 12,190 as a target, leaving good support around 12,039.

Hourly momentum indicators are also continuing to improve and suggest weakness is a chance to buy.

 

Richard Perry

Richard Perry

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