DAX Xetra (cash index)
What a breakout!
Having looked in a somewhat precarious position into Wednesday’s close, a huge one day turnaround (helped by easing US/EU trade tensions and euro weakness on the ECB) has driven the DAX back higher and through key near term resistance.
Last week’s high left resistance at 12,780 which had been a pivot, but a strong bull candle yesterday saw the market close decisively above the resistance and the bull run within the four week uptrend channel continues.
Momentum indicators continue to pull encouragingly higher, with the MACD lines now rising above neutral whilst the RSI and Stochastics ticking higher.
The early move to the upside today again helps to strengthen the bull position, however it is also a characteristic of this trend channel that retracements are commonplace.
- Buying into weakness remains the strategy, with the initial band of support at 12,700/12,780 now a near term buy zone.
- The trend channel high currently comes in around 12,950 with the psychological 13,000 level closing in.
On the hourly chart, the immediate upside potential becomes a touch limited, with the RSI back around 70 (tends to limit on the hourly RSI) and intraday weakness is an opportunity.
- The old medium term pivot at 12,600 now provides a basis of a floor for the channel with the outlook increasingly positive again.
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