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Technical Update - DAX/GER40 taking out key support turning bearish

Equities 1 minute to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

DAX indicators have been warning about an exhaustion of the uptrend. Yesterday the Index couldn't hold on any longer taking out key support at 14,149. 


DAX 
closed yesterday below key support at 14,149. The RSI divergence has warned about the trend has been weakening and with the rejection of a new higher close 13th December despite spiking higher a correction was in the cards.
New short term down trend is confirmed with support at around 13,564 close to the 0.382 retracement at 13,601. 55 and 200 daily SMA’s will provide support around that level

RSI still above 40 i.e., positive sentiment but if we see lower levels RSI is likely to break the 40 threshold moving in to negative territory adding to the bearish picture.
For DAX to reverse this bearish picture a close above 14,676 is needed.
If 13,564 is taken out DAX will be looking at  13K

GER40 level: Support at around 13,570. See second chart below

 

DAX d 16dec
Source: Saxo Group
GER40 d 16dec
Source: Saxo Group

RSI divergence explained: When the price of an instrument is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend

Author is holding a short position in this DAX

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