Recent positivity in the DAX 30 has led to a rally of 0.36% from its low set in December. The German benchmark managed to trade past the 61.8% fibo of the Feb 2016-Jan 2018 rally, to touch a low of 10,275.54. However, the recent bullishness has not eliminated the overall bearish technical picture. DAX remains below the down sloping neckline of the broken head & shoulders topping pattern. Moreover, price has found resistance at the valid uptrend line which dates back to 2011. Last week’s Doji candle failed just shy of the 21-WMA (Weekly Moving Average), reinforcing topside pressure.
Even as price has rallied higher on the back of improving sentiment, short- and medium-term trending setups continue to underpin bear themes. 50/21 WMA’s are trending south and may offer strong resistance to continued positivity. However, the separation between the two moving averages may suggest a possible oversold situation. 50/21 WMA’s currently reside at 12,016.08 and 11,344.06 respectively.
Momentum setups continue to display a negative backdrop. The 14-week RSI, which has broken out of its downtrend, remains below 50. The MACD has positively crossed, though remains significantly below 0.
The DAX is showing signs of heightened topside risks, though price would need to trade through a flurry of resistance levels to eradicate negative pressures. Overall, the bias remains to the downside and it would be prudent to look for opportunities in that direction.
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© Akif SH. Din MSTA, CFTe, AGORA-direct Limited, 28/01/2019.
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