DAX tests key resistance ahead of key events
German index has reached its highest level since mid-September after rebounding around 11% off its lows hit in early October.
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In Europe, attention will turn to the European Central Bank interest rate decision on Thursday. Before discussing what this means for EU stocks and deliberate on other macro themes in greater detail, in my report due to be published shortly, lets quickly have a look at the chart of the DAX.
The German DAX has reached its highest level since mid-September after rebounding around 11% off its lows hit in early October. But, as you can see, the German index is now testing a major technical resistance area between 13100 and 13200:
This is where several technical factors come into play, including the bearish trend line that has been in place since the start of the year, the 61.8% Fibonacci retracement level against the August high, and the base of the breakdown in September.
Thus, there’s a good possibility that the recovery could unravel here, and the trigger could be the ECB, US tech earnings or concerns over the global economy.
I will discuss these topics briefly in my upcoming report. Stay tuned.
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