DAX Xetra (cash index)
The selling pressure continues to accelerate lower as the DAX has now broken below key support to trade at the lowest level since February 2017.
We were concerned that the prospect of recovery were too soon to be backed and our concerns proved to be correct, as the market ignored the late rebound on Tuesday to sell sharply down yesterday and closing below two massive support levels.
On a long term basis this is increasingly worrying as there is a massive top pattern formation in place now.
The sell-off has continued today and unless the bulls react quickly this is going to be a massive bearish outlook shift.
Momentum indicators are at levels o the RSI and Stochastics where the bulls have responded throughout 2018, so if they shun the opportunity it would be a damning indication and set up the DAX for continued weakness.
- The old key lows at 11,726/11,865 are now a key band of overhead supply.
- There is a gap open now from today’s gap lower which lends resistance at 11,712 whilst today’s initial stretched intraday rebound at 11,638 is initial resistance.
- As for support, the concern is that if a floor of tentative support at 11,400 (from early 2017) fails there is little support until 10,800.
The bulls need to respond, and fast.
For now though, even though the move is stretched, rallies have to remain a chance to sell.