The German DAX index traded higher the last few days, breaking above the downside resistance line drawn from the high of January 5th. The advance was stopped yesterday near the 14600 zone, marked by the high of April 21st, but with the index staying above that prior downside line. Thus, as long as this is the case, we will consider the short-term outlook to be cautiously positive.
A break above 14600 could target the key territory of 14900, hit as a resistance on March 29th, and which also acted as a key support between May 4th, 2021, and February 14th, 2022. However, we would like to see the bulls overcoming that zone before we get more optimistic on further advances. If so, the next stop may be at 15230, marked by the high of February 21st, the break of which could carry extensions towards the high of February 2nd, at 15740. Another break, above 15740, may encourage participants to climb towards the record high of around 16285, hit on November 19th and January 4th.
Shifting attention to our short-term oscillators, we see that the RSI moved higher, but flattened slightly below its 70 line, while the MACD, although below both its zero and trigger lines, shows signs of topping as well. Both indicators detect slowing upside speed, which suggests that a setback may be looming before the next leg north, perhaps even below 14310.
Nonetheless, in order to start examining whether the bears have gained full control again, we would like to see a clear dip below 13275, marked by the low of May 10th. This will confirm the index’s return back below the downside line and may trigger declines towards the 12425 zone, marked by the low of March 7th. If there are no buyers to be found near that territory either, then we may experience extensions towards the low of October 30th, 2020.
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