DAX tumbled during the European morning Thursday, falling below the 11985 support (now turned into resistance) barrier, as well as below the medium-term upside support line drawn from the low of December 27th. If the index closes the day below that line, this could be an early signal that the near-term outlook is shifting to a more bearish one.
If the bears are willing to stay behind the driver’s seat, then we may see them pushing the price towards the 11835 barrier, defined by the inside swing high of March 19th and the low of April 9th, as well as near the low of March 13th. If the bulls are not willing to enter the game even near that key support, then its break may have more bearish implications. It would confirm a forthcoming lower low on the daily chart and may initially pave the way towards the 11735 zone, defined by the low of April 2nd.
Looking at our short-term oscillators, we see that the RSI fell below 50, drifted south, and now looks ready to test its 30 line. The MACD lies below both its zero and trigger lines, pointing down as well. These indicators detect downside speed and support the notion for DAX to continue trading lower for a while more, perhaps until it challenges the 11835 hurdle.
On the upside, we would like to see a decent recovery above 12045 before we start examining whether the bulls are willing to fight back. Such a move could confirm the price’s return above the aforementioned medium-term uptrend line and may pave the way towards the 12175 territory. Another break, above 12175, may allow the recovery to continue towards our next resistance, at around 12265, defined by the peak of May 20th.
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