DAX Xetra (cash index)
The DAX has completely taken off in recent sessions, as a run of strong bull candles has completely flipped the outlook once more.
Key to all of this is that the market is bursting through what is a band of key long term resistance between 11,725/11,865 which if achieved on a closing basis, marks a move clear of the overhead supply from the major lows of 2017/2018.
Impressively strong bull candles with upside gaps through resistance shows how strong the bull are for the moment.
Today’s move above 11,823 is a near six month high and effectively now confirms a big basing process on the DAX.
- This should ensure the continued recovery in the coming months and at least opens the September high at 12,458.
- A close clear of 11,865 would mean that this old pivot band 11,725/11,865 would be supportive.
The key will now be how the market responds to the breakout, as previously there have been breakouts that have subsequently slipped back into consolidation.
- A gap above 11,777 is now open this morning, whilst the 11,823 breakout is also supportive.
With the RSI almost at 70 (similar to where the February and March rallies petered out) means that caution should be taken with chasing the immediate move higher.
Corrections are a chance to buy.
- Initial resistance is 12,120/12,190 but expect a move towards 12,458 in due course.