Technical Analyst, Saxo Bank Group
As described in last Technical Update GER40 cfd and DAX were likely to dip below 13K . It did just that, and them some ie. a bit lower than expected. Down to 0.764 Fibonacci retracement of the Bull market since November 2020. It was also the 2.764 Projection of the Double/triple top like formation formed in 2021.
The bounce seems strong but it could soon face some resistance. We are back above 13K. Yesterday the GER40 cfd/future formed a Bullish Engulfing candle indicating bottom and reversal. However, trend is still down, RSI below 40 and no divergence on RSI and MACD, selling pressure could resume. Resistance at around 13,741 but rebound could continue to 13,900 i.e. 0.382 Fibo retracement of entire bear move since January peak.
However, if market is to be hit by good news rebound could extend to around 14.500. That could potentially be the 4th corrective move before a potential 5th move down.
Looking at the DAX (cash) Index it gapped back up this morning after forming two exhausting like candle previous two days. The Index could bounce back to the Consolidation Area around 14K. However, if sellers take back control and close the gap between today’s and yesterday’s candle bodies (two horizontal dashed lines) we could see a push to test lows from last week at 12,438 and likely new lows.
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