Technical Update - DAX/GER40 in short-term uptrend. Can it break key resistance or is it running out of steam?

Technical Update - DAX/GER40 in short-term uptrend. Can it break key resistance or is it running out of steam?

Equities 2 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

After closing above the short-term falling trendline DAX took off yesterday closing at the 0.382 retracement confirming short-term uptrend (higher highs and higher lows). DAX is set to test the resistance at 13,565. However, DAX seems to have found some resistance here at 13,378 which is need to break before having a go at the Gap resistance area. 

The Gap resistance area 13,565-13,762 is quite strong, however. Especially the lower resistance at 13,565.  
Can DAX close the gap or not, is the key question. If it closes the gap i.e. closing above 13,762, higher levels towards 14,162 and maybe 14,700 is in the cards. If it cannot close the gap, downtrend is likely to resume. Since RSI hasn’t closed above 60 it is still showing negative sentiment.

Source: Saxo Group

GER40 cfd/DAX future seems to get rejected at the 0.764 retracement. RSI has been rejected at 60 – for now – but could have another go over the next few days. If requires GER40 takes out today high at 13,450, however. If it does GER40 will most likely test the strong resistance at 13,675.

If it fails, as it seems at the time of writing, we could see a few days where GER40 drops back to around 13K. Joker is ECB and rate hike decision due this week which is likely to create volatility.

Source: Saxo Group

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