DAX Xetra (cash index)
Having been positively configured on a breakout to multi-month highs earlier this week, the move has turned on its head, with a correction which is threatening the bullish outlook.
A bearish candlestick yesterday with a 185 tick loss on the day (-1.5%) has been followed by another gap lower this morning.
A 5 week uptrend has been broken, although this comes within the bigger 12 week channel, and the risk is now for a retreat back towards the channel support currently around 11,420.
The bulls will continue to console themselves with the market trading above the 11,370/11,415 key medium term pivot band, but sentiment is now threatening corrective.
How this develops now in the next session of two will be key, as for now, there is a positive medium term configuration on RSI (still above 50) with MACD and Stochastics lines still positively set up even though they have all ticked lower near term.
- There is an old pivot at 11,555 on the hourly chart which is an initial gauge of support and if this is decisively breached there could realistically be a retreat back towards 11,370/11,415 again.
- How the market also responds to this morning’s gap lower will be key, and a failure to close the gap at 11,600 will be a signal to suggest the near term correction is being accepted.
- A move back above 11,677 would re-open the recent high of 11,826 again.
- There is minor support at 11,487.