DAX Xetra (cash index)
A decisive downside break of key support has pulled the DAX to levels not seen since April, but will the selling pressure continue?
The near term technical momentum behind the move lower is certainly running away, with the market now it is eighth session of decline with over 600 ticks lost at its nadir.
The break below 12,104 key support of the old July low has now opened the March low at 11,726 as the next key floor.
However, as I discussed yesterday, although momentum is clearly negative near term, the medium to longer term RSI looks to be back around levels where we have seen key technical rallies tempted back in throughout 2018.
There have been two decisive bear candles in a row now, but the market remains under pressure by the trade story (driving emerging markets and commodities lower, and the DAX is a key market with a significant export focus).
This continues to pressure the DAX this morning, but another gap lower at the open today still remains unfilled at 12,035 so far.
The hourly chart is still negatively configured but a touch stretched now on the RSI and Stochastics.
- Can the bulls find a low at today’s early low at 11,988 which is initially now supportive?
- A close higher above 12,035 today could be a trigger for a technical rally.
- Resistance is therefore 12,104/12,120 and then 12,300.
The concern would be that an intraday fill of the gap that then fails and turns to close decisively lower which would simply continue the sell-off.