DAX traded higher on Friday, after hitting support near the crossroads of the 12000 psychological zone and the lower boundary of the rising channel that’s been containing the price action since March 19th. Although the recovery was halted near the high of June 23rd, at 12625, as long as the index continues to trade within the channel, we would consider the near-term outlook to be positive.
That said, in order to start examining the resumption of the prevailing trend, we would like to see a clear break above 12920, marked by the high of June 8th. Such a move would confirm a forthcoming higher high and may open the path towards the all-time high, at around 13828, hit on February 20th. The bulls may decide to take a break after hitting that record, and thereby allow the index to correct lower. Nevertheless, as long as it would be still trading within the upside channel, we would see decent chances for the bulls to take charge again. If they manage to overcome the 13828 zone this time around, the index will be brought into territories never seen before, and thus it’s hard to clearly mark where it may next meet resistance. We would see as a possible target the psychological 15000 area.
Turning our gaze to our daily oscillators, we see that the RSI rebounded from near its 50 zone, but has just ticked back down, while the MACD, already positive, has just poked its nose above its trigger line. Both indicators detect upside speed, supporting the notion for further advances, but the fact that the RSI ticked down enhances our choice to wait for a break above 12920.
Before we start considering a bearish reversal, we would like to see a clear and decisive dip below 12000. Such a move would not only confirm a forthcoming lower low, but would also bring the price below the lower end of the aforementioned channel. The bears could then aim for the low of June 15th, at 11600, the break of which could extend the decline toward the inside swing high of May 19th, at 11250. Another break, below 11250, may lead the battle towards the 10850 zone, marked as a support by the low of May 22nd.
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