DAX Xetra (cash index)
Another key test of the strength of the bull run on the DAX is underway as the trend channel is tested.
In the past few weeks the channel has run strongly higher and several tests have been successfully held.
Once more this morning with a drift back , the channel is under threat.
Last Friday’s latest gap higher took the DAX to seven week highs and the move is retracing today.
- Intriguingly the gap support is at 11,149 which is exactly where the trend support also comes in today.
A “fill” of the gap and close back above it would be considered a positive signal still however, if this gap is “closed” then the bulls would be back under pressure.
- The emphasis would then turn back on the key support of the pivot at 11,000.
For now momentum indicators are just taking this drift lower as little more than an unwinding move, but this could change quickly should today’s candle be decisively negative.
This really is an interesting crossroads that DAX has reached once more.
The hourly chart shows this is just an unwinding move currently, with the hourly RSI still above 40 (a level where the rallies have kicked in throughout January) and the hourly MACD lines above neutral.
- Initial resistance at 11,275 with Friday’s high key at 11,321.