DAX Xetra (cash index)
As the recovery has accelerated higher in recent sessions the DAX is finding a little resistance this morning which has threatened a corrective move.
After such a strong run of gains and positive candlesticks, it will be interesting to see how the bulls respond to this early slip.
Will it be a concern that this is coming as the RSI has hit 60, an area where the rallies of July and August began to lose momentum?
- There is a band of resistance between 12,400/12,600 and on a medium term basis, a sell signal around here could be an excuse to take profits.
The market remains under the three month downtrend (which comes in around 12,500 today), but equally there is the support of a two week uptrend coming in at 12,230 today, so in terms of trend, there is some room for an unwind within the near term trend without too much disruption.
- There is a gap still open from Friday’s pull higher at 12,354 which if closed would add to near term corrective momentum, so how the bulls respond to this gap could be key near term.
- Filling the gap (touching below 12,354 only to close back above it) would be seen as a positive response, especially with a close back above 12,400 (which would leave a positive candle).
However, on the hourly chart there is a MACD cross sell signal and some unwinding momentum building which would put pressure on initial support between 12,300/12,350 support.
- Friday’s high at 12,438 is initial resistance.