DAX Xetra (cash index)
An incredible turnaround in the early part of this week has once more flipped the outlook for the DAX and once more the bulls seem to be in control of the market.
The sharp sell-off of last week which decisively breached the 11,000 pivot saw a pullback rally yesterday that spent much of the day contemplating the pivot again.
However if the big gap higher this morning can be held, then there is every reason to believe that the outlook will continue to improve again.
- A gap higher from 11,041 is open but the key gauge for the outlook will again be the pivot around 11,000.
There is a quick turn higher on the momentum indicators with the RSI back above 50, Stochastics sharply turning a corner and with MACD lines stabilising above neutral.
However, the reaction to this gap higher today could be key.
This is because the turn higher has been so quick after what had looked to be a developing negative outlook last week.
Can this move be trusted?
Gaps do tend to be at least filled and if this move comes today or tomorrow then this would reflect what could be an increasingly chaotic outlook on the DAX.
However, holding the gap breakout with a strong bull candle today would be a really positive signal.
The hourly chart shows the RSI picking up sharply but the hourly MACD lines need a more considered rally to avert what is still a corrective outlook.
- If the bulls can continue to build there is little real resistance until 11,3000 whilst the 11,371 February high remains key.