DAX holding up well, but can the resistance be breached?

DAX Xetra (cash index)

Equity markets have fluctuated in the past few sessions but it is interesting to see that given the sharp deterioration in risk appetite, there has not been an overly significant sell-off.

Yesterday’s negative candle saw the DAX close strongly lower, but not breach the 10,387 support of the higher low above 10,279.

An open higher today is once more pulling the prospect of a near term upside test of resistance.

• Resistance is in place between the December lows of 10,585/10,700 and reaction highs over the past six sessions have repeatedly found resistance within what is now this near term overhead supply.

Can the market build for a move through this near term ceiling?

Encouragement comes with the three week downtrend recently breached and there is an interesting basis of support forming.

However, there is an ongoing negative medium term configuration with the RSI struggling under 41 over recent weeks, whilst the MACD lines are tracking lower.

• This is still very early stages and even if the near term bulls can breakout above 10,700 there is still significant resistance coming in around 11,000.
• A move below 10,387 would also shift the emphasis too and re-open the 10,279 low and the 10,150 implied long term target.

The hourly chart shows an ongoing trend lower , whilst the hourly RSI is restricted around 60 and MACD lines failing around neutral.

These hourly indicators need to improve in order for a near term rally to be sustainable.

In the absence of this, rallies will continue to struggle and the outlook remain negative for a retest of support and below.