dax slide threatens recent uptrend 1803252016
<p>Germany’s DAX index dropped along with other European and US equity indices on Thursday as commodities continued to show persistent weakness and the specter of […]</p>
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Germany’s DAX index dropped along with other European and US equity indices on Thursday as commodities continued to show persistent weakness and the specter of a more hawkish Fed weighed on global stock markets. The DAX closed down nearly 2% on Thursday, exceeding losses suffered by its UK counterpart, the FTSE index.
For the past month-and-a-half, the DAX has been well-entrenched in a strong bullish rebound and recovery from February’s long-term lows around 8700. During the course of this rebound, the index has broken out above some major resistance factors, including the important 9300 level and the 50-day moving average. The most recent culmination of this short uptrend occurred earlier this week, when the DAX reached and then retreated from major resistance roughly around the 10100 level. That key level has been a relatively frequent pivoting point for the German index in the past. The 10100 level is also approximately in the vicinity of the 50% Fibonacci retracement of the last major bearish run from the 11400-area highs late last year down to the noted February lows around 8700.
After Thursday’s extended retreat from this resistance, the index has fallen back down to an uptrend support line that has defined the rebound and recovery for the past month-and-a-half. Currently sandwiched between this uptrend line to the downside and the noted 10100-area resistance to the upside, the DAX has arrived at a critical technical juncture. In the event of a breakdown below the uptrend line, price could once again revert back to the longer-term downtrend that has been in place for nearly a year. In this event, the key short-term target to the downside remains at the important 9300 support level. In the opposite event of a sustained breakout above 10100-area resistance, a clear further resistance level to the upside resides at the key 10500 level.
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