Technical Update - DAX down trends point to test of July lows. Euro Stoxx 50 testing key support.
Kim Cramer Larsson
Technical Analyst, Saxo Bank
After DAX Index was rejected at the falling trend line and formed a Bearish Engulfing top and reversal pattern selling has been heavy. The down trend was confirmed Friday and the key support area at around 12,438 is likely to be tested within few days. RSI close below 40 threshold supporting the bearish outlook.
To reverse the trend a close above 13,948 is needed. A close above Friday’s high at 13,375 will just put the down trend on hold.
If DAX close below key support at 12,438 there is not strong support before around 11,586.
RSI on weekly chart is testing the rising trendline and if a weekly close below the 11,586 level is likely to be reached.
Euro Stoxx50 is in a confirmed down trend despite RSI still above 40. Support at around 3,581where a minor bounce should be expected. However, Bollinger bands are expanding and a break of both the support and a break back below the falling trend line (black) is likely to occur in the coming week. Minor support at around 3,477-3,466.
July lows at around 3,357 is likely to be tested in a couple of weeks. To reverse the down trend a close above 3,7070 is needed.
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