After a few attempts last week, the German Dax index finally closed the body gap between 11,358 and 11,524 on November 2. It was not a convincing close of gap, however, as the market opened significantly higher at around the 0.764 retracement level before sellers immediately took control and pushed the index down to test the gap.
Since then, the Dax has hovered around the gap and there is a high risk the bear trend can be resumed. A close below 11,358 is likely to spur a further sell-off, testing October lows.
The Dax needs a close above 11,650 for the short-term bearish picture to be put on hold. If this occurs, a move higher to around 11,840 could be seen.
The Relative Strength Index remains in bearish territory with no divergence, confirming the general bearish picture.