DAX: Potential bearish breakdown below 12900 on Middle East tensions
Kelvin Wong January 8, 2020 3:11 AM
Medium-term technical outlook on DAX (Germany 30)
click to enlarge charts
This analysis is an update to our earlier weekly stock indices outlook report published on Mon, 06 Jan (click here for a recap).
Key Levels (1 to 3 weeks)
Intermediate resistance: 13150
Pivot (key resistance): 13450
Supports: 12900, 12790 & 12600/500
Next resistances: 13600/750 & 14115
Directional Bias (1 to 3 weeks)
Key elements of the Germany 30 Index (proxy for the DAX futures) are now advocating for potential bearish breakdown below a 4-week old range configuration in place since 19 Nov 2019. Flip to a bearish bias below 13450 key medium-term pivotal resistance and a break below 12900 reinforces a potential corrective down move sequence within a major uptrend phase to target the next supports at 12790 and 12600/500 next.
On the flipside, a clearance above 13450 invalidates the bearish tone for a probe on the current all-time all high area of 13600/750. Only a daily close above 13750 opens up scope for a more pronounced rally to target the next resistance at 14115 (Fibonacci expansion cluster).
- Since its swing high of 19 Nov 2019, the price action of the Index has traced out a medium-term bearish reversal “Double Top” configuration with its neckline support at 12900 and potential bearish breakout exit target at 12600 that confluences with the former swing high areas of 13 Sep/22 Sep/01 Oct 2019.
- The daily RSI oscillator is now looking vulnerable to the downside as it is testing a key corresponding support at 45 level the 3rd time with a prior bearish divergence signal. These observations suggest medium-term downside momentum of price action is building up.
- The 12600/500 medium-term support is also defined by a Fibonacci cluster (38.2% retracement of the prior multi-month up move from 15 Aug 2019 low to 02 Jan 2020 low & 1.618 expansion of the latest slide from 03 Jan 2020 high to 06 Jan 2020 low projected from 07 Jan 2020 high.
Charts are from City Index Advantage TraderPro & eSignal
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.