Yesterday, the DAX finished the day flat, up around 0.2%. The recent slide in German stocks has come despite lower yields and weaker Euro. We are looking at a ‘lower high’ at the moment with the end of May peak at 11926 acting as the swing high. We have broken below the lower parallel on my 4-hour chart using the October trend-line, along with the mid December low and now the next key level is the 11150. If this goes then we will likely see an acceleration towards the mid-10000s. I am a bit concerned about that.
In the short-term I am looking for the DAX to find footing at previous support levels. But a break through these will perhaps make me realise that the historical summer trend and the lift-off expectations in US will cause a slowdown in the equity markets, coupled with Greece we could see some bearish months ahead. So right now, all eyes on 11150, or a rebound.
Today we have already reached the daily R2 and beginning to retrace the earlier sell off. I would like to see how we react to the 10365-10385 zone, as we could we just plummet even further, especially as there would be where support would become resistance. Of course, if we have a recovery from urrent levels and break through and hold 11400 again, the the daily candle will leave behind a large stem/wick and look a lot more bullish. So I may just sit out for a while and watch what happens, because it’s looking a little heavy at the moment.