Between the 24th and the 26th of October, Dax managed to form a double bottom on a 4-hour chart. Since then, the German index continues to push higher, above the short-term upside support line drawn from the low of the 26th of October, slowly regaining bit-by-bit of what it has lost over the previous month. As long as that upside support line continues to hold, we will aim for higher in the short run. From the near-term perspective, the upside could be limited due to the medium-term downside resistance line taken from the peak of the 14th of June.
A good strong break above the 11680 resistance level, marked near the highs of the 2nd of November and the 22nd of October, could raise more confidence among the bulls, who in their case could lead DAX towards the next potential obstacle at 11855, which was the high of the 17th of October. If that obstacle is no match for the bulls, the buying momentum may continue further. The next potential resistance zone to watch out for could be the psychological 12000 barrier, which was last tested on the 10th of October.
Even though the RSI and the MACD are not giving us a clear indication about their willingness to moves to the upside, nevertheless they are both pointing higher. Also, the RSI still remains above 50 and the MACD is trying to move back above the trigger line and stay in the positive territory.
On the downside, if the aforementioned short-term upside support line gets violated and DAX drops below the 11450 zone again, this may be the alarm in the bull-bloc. If the index continues declining and moves below the 11370 area, marked by the inside swing high of the 25th of October, more sellers could start joining in the action and pushing DAX towards the 11205 level, or even the 11155 hurdle, marked by the low of the 29th of October.
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