DAX Xetra (cash index)
An intraday correction lower formed a bearish engulfing candlestick pattern yesterday and with selling pressure continuing today there is a concern that the recovery is turning negative once more.
The market has dropped a further 100 ticks in early moves today and the move has broken the support of a pivot at 11,445 and now the key near term support at 11,400 is under pressure.
A close below 11,400 would be a significant deterioration to the outlook and would re-open 11,212 initially but the key October low at 11,051 comes right back into view once more.
The concern is that the RSI has fallen over under 50, whilst the Stochastics are also close to a bear cross that would be similar to the late August rebound which resulted in renewed selling pressure.
The hourly chart shows momentum indicators taking n a more corrective configuration now with the RSI dropping below 40 for the first time in a couple of weeks, whilst the MACD lines are swinging below neutral.
- A close below 11,400 would be confirmation of the renewed bear control and would mean that rallies become a chance to sell.
- Resistance is at 11,532 and 11,649 below 11,690.