DAX Xetra (cash index)
What looked to be a corrective drift within the recovery uptrend turned into a deluge of selling pressure yesterday and now the market is back at a crucial crossroads once more.
A huge bear candle has broken the uptrend and brought the market back to the key medium pivot around 11,000.
How the bulls respond around the pivot will be key for the medium term outlook.
Losing 300 ticks in one session has had a major negative impact on momentum indicators.
Previous positive configurations are now sharply deteriorating, with a bear cross on the MACD line (first since early December), whilst the Stochastics are accelerating lower and the RSI is below 50.
Can the bulls survive this distinctly volatile phase of trading?
It is interesting to see the 55 day moving average (currently bang on 11,000) has previously been a basis of resistance during the 2018 sell-off but has been supportive since mid-January.
- An early slip below 11,000 this morning has instantly bought into (leaving an early low of 10,983) back above 11,000 again.
The hourly chart shows the immediate selling pressure has dissipated, but the hourly momentum has deteriorated and is now negatively configured, so how the market responds to this rebound will be key.
- There is a band of resistance of old lows 11,050/11,100 which will formed overhead supply and the bulls need to overcome quickly to prevent the negative outlook from growing.
- A close below 11,000 changes the medium term outlook with downside towards 10,790.