DAX Xetra (cash index)
The bulls would have been worried at the open yesterday, but their reaction in the past 24 hours has been impressive.
Although the market ended by closing lower on the session, the losses were far less than originally feared and today’s gap higher will give some confidence that a potential recovery could now begin to form.
There has been a mix of signals in the past few sessions now, and yesterday’s bullish candle in a negative session simply adds to this mix.
Filling the early downside gap from yesterday morning is effectively still a negative move, but the gap open this morning helps to negate this.
- There is now another gap to fill at 12,301 and how the bulls react to this gap will be key.
Filling the gap and moving back higher would be bullish within the recent consolidation.
There is a mild improvement in momentum but much more needs to be done.
Initially the Stochastics need to cross above 20 and RSI move decisively above 40 but especially the MACD lines crossing higher would be a confirmation of a recovery building.
The hourly RSI consistently above 60 and hourly MACD lines above neutral would also play into a near term recovery.
- However, until the resistance band 12,380/12,440 is broken then this is simply a consolidation within the sell-off, but at least the selling pressure has abated, at least for now.
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