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DAX slips back to question the sustainability of the recovery

DAX Xetra (cash index)

There seems to have been a pause in the rally of early 2019 and this opens some intriguing questions now.

Although yesterday’s rally added another 90 ticks into the close, the daily candlestick body was so small it was almost a doji candle (which tends to indicate uncertainty).

The market has subsequently fallen back in early moves this morning in a slip that has broken a one week mini-uptrend.

As the RSI again falls back from a shade above 50, similar to the failure of the rally in early December, is this the end of the rebound?

  • There is concern that this could be the case, given the significance of the resistance overhead around 11,000 (yesterday’s high was 10,961).
  • The key to the outlook on a near term basis will be the old near term pivot band 10,585/10,700.

If this can hold as support then there is the prospect still that this could all still be part of a basing process.

Momentum indicators on the daily chart acre still in their recovery mode as the Stochastics and MACD lines rise.

  • Today’s early low at 10,788 is initially supportive.

It is worth watching the hourly momentum indicators which are slipping back from positive configuration.

If the hourly RSI moves decisively below 40, hourly MACD moves decisively below neutral it would be a concern.

 

Richard Perry

Richard Perry

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