DAX Xetra (cash index)
Renewed tariff threats and the DAX has dropped back again early today.
The issue will be how the bulls can respond now and whether the recent recovery phase has already played out.
It now means that price action in the next session or two will be seen as key to the outlook.
- After the recovery in recent sessions has started to see the market closing back above 12,100, a failure in the band of overhead supply between 12,100/12,130 would be significant concern.
There is a developing improvement in the momentum indicators, but a couple of negative sessions could really put the skids on this recovery.
As yet there is also still no bull crossover on the MACD lines, and if the Stochastics start to roll over there is a risk that the bulls will lose faith in the recovery.
- The intraday gap lower needs to close the gap at 12,075 (from Friday’s low) and this would leave today with a positive candle (even if the close is lower).
- The hourly chart shows the market has slipped back to the neckline of a small base pattern at 12,040 which is a basis of initial support and if this is bought into then the bulls will be showing a strong reaction for buying into weakness.
A closing breach of this neckline support would be a deterioration in the outlook now.