Technical Update - Closing gaps but DAX and GER40 are facing strong resistance
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
DAX closed the gap once again but is facing strong resistance. Bear trend can soon resume. GER40 inches away from key resistance
With the forming of a Bullish Engulfing pattern last week indications of a possible bottom and reversal was there. However, DAX didn’t seem to be able to keep the upside momentum with the Index sliding back below the gap. But that changed yesterday. Helped by heavy buying in US equities DAX closed the gap from last week and is back now back above the gap.
Next key resistance for DAX is 12,674. If DAX fails to close above that level the Index is likely to resume down trend.
If DAX manages to close above 12,674 there is strong resistance around the 0.618 retracement of the September downtrend at around 12,915. 55 daily SMA is coming down indicating underlying bearish sentiment and will provide resistance
The GER40 cfd/DAX future dipped below key support at 16,707 bouncing back above the 0.618 retracement of the 2020 trough to September 2021 peak.
To build on the rebound momentum GER40 needs to break above 12,690 for further upside momentum. If it manages to do that there is strong resistance at around 12,897-12,938.
If the future slides back below Thursday low at 11,933 bear trend is to resume and last week’s low at 11,808 is likely to be taken out.
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