Forex Analysis:DAX Futures Extend Gains Towards 11920

Bottom line: DAX long term structure remains bearish against 13800 levels. The indice rall…

Bottom line: DAX long term structure remains bearish against 13800 levels. The indice rallied yesterday, extending its gains past 11900 mark. We now need to see a break below 11500, to confirm a bearish reversal ahead.  

Fundamental Outlook:

DAX continued to rally yesterday and managed to close higher by over +2.20% above 11900 levels. Its counterparts SPX500 and Dow Jones managed to post moderate gains of +0.30% after slipping into the negative during early hours.

Risk sentiment continues to surprise investors as focus still remains on COVID-19 after effects on Global Economies as they re-open, US-China tensions and the Brexit. The ongoing protests over killing of George Floyd in police custody shall also be closely watched.

WTI Crude rally continued yesterday and it gained over a +1.0%, closing above $35.50. Brent Crude also managed to close higher at $38.66, up over +2.3%. The production output cuts in May 2020 might be extended further in the next OPEC+ meet.

Technical Analysis:

DAX continues to remain in control of bulls as the indice extends its counter trend rally towards 11920 (futures), as we write this article. It is inching closer to immediate price resistance around 12300 and only a break below 11500 would confirm that a meaningful top is in place.

DAX had earlier dropped from 13800 through 8250 levels in an impulse. It confirms that DAX needs to print yet another low below 8250 to complete the corrective structure. It remains to be seen from which price resistance, the indice reverses lower again.

The fibonacci 0.618 retracement of previous drop has already been hit around 11800 but futures triggered yet another high yesterday. Ideally DAX should stay below 13800 mark to keep the bearish structure intact.

Traders might be willing to initiate fresh short positions on a bearish reaction around current price (11800/900), with protective stops above 13800 and projected target below 8000 mark, going forward.

Prepared by

Harsh Japee, Technical Analyst.

 

DAX Chart

 


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