Technical Update - DAX/GER40 testing year long falling trendline. EuroStoxx50 struggling to reach Double bottom target
Kim Cramer Larsson
Technical Analyst, Saxo Bank
DAX/GER40 testing year long down trend and Fibo levels. Will it be rejected once again resuming bear trend?
EuroStoxx50 struggling to reach potential Double Bottom targets.
DAX is testing 0.786 Fibo retracement of the September downtrend at 13,200 and the falling trend line going back most of 2022. (Black falling line).
RSI is above 60 meaning positive sentiment and indicating higher levels could be seen. However, last time DAX tested the falling trend line (circled on the chart) RSI was also above 60 but failed to build further upside momentum and bear trend resumed.
IF DAX cannot close above yesterday’s high at 13,203 sellers could take back control pushing the index lower.
If DAX is being pushed below 12,914 selling pressure could accelerate. A close below 12,548 bear trend resumes.
If DAX on the other hand manage to close above 13,203 it could test strong resistance at 13,565.
RSI is key here; if it drops back below 60 followed by a close below lower rising trendline the uptrend seen since September trough is likely to be over
GER40 identical picture. Testing falling trend line and 0.786 retracement. If closing above 13,218 there is upside to 13,570.
IF sliding back below 55 SMA (Dark blue) bears could get renewed energy. Below 12,541 bear trend has resumed.
Weekly DAX chart: Down trend is still intact in DAX currently testing 0.618 retracement of the mid-August to End-September down move. Strong key resistance at 13,565 is a few points above the 0.786 retracement. That level is key for medium term Bull/Bear trend. If closing above, it is a strong indication of Bear trend is over and foundation for a new uptrend.
EuroStoxx50 is hovering around its 0.786 retracement at 3,590, trying to reach 1.618 projection of the double bottom pattern at 3,625. If EuroStoxx 50 fails and slides back below 55 and 100 SMA’s and RSI drops back below 60, it could give Bears renewed energy.
Strong overhead resistance at 3,683.
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