DAX Xetra (cash index)
Yesterday’s rally failure adds to concerns that the state of the recovery on the DAX is still highly questionable.
A big key one day reversal (bearish engulfing candlestick) threatens the turn the outlook corrective again.
As we had expected, the gap from 11,041 has now been filled and if it is closed then the medium term pivot at 11,000 which is still a key gauge for sentiment will come under pressure.
Looking at the momentum indicators, the recovery has now rolled over and at best the outlook is neutral on a near to medium term basis.
The RSI has fallen back below 50, whilst the MACD lines are tracking back lower again just as the Stochastics are falling over around 50.
- An early look at 11,000 has been contained for now, but there will be a concern that if the market closes below 11,000 the bears will be back in control again.
- There is a low at 10,863 which then becomes a crucial medium term support to watch.
- A gap down from 11,078 is now open but effectively a gap higher has been followed by a gap lower this week, something that will really concern the bulls.
On the hourly chart there is a bull failure around 60 on hourly RSI and a MACD cross sell signal.
- There is resistance between 11,077/11,115 under what could now be a lower high at 11,260.