All kinds of technical indicators are starting to show that the Dax recovery is gaining more and more speed and we have clearly recovered significantly on the Dax over the last week or so.
We had a gap lower this morning, showing just a hint of weakness, but we are already threatening to close that gap and this could be seen as a chance to buy. The 9600-9632 resistance zone is pretty strong at the moment, so that will be a key area for Bulls to take out which could spark a move towards 9700+. The first attempt to close the gap, looks to have been rejected and we are experiencing a push back.
Traders are looking to buy dips at the moment, so we can predict that the major buying zone will be between 9400-9475, assuming that the recent low from this morning does not hold.
EURUSD has fallen down to 1.10 which is a pretty big psychological support level. Traders are stretched short, so if this holds, we could drop further on the Dax. If this level goes, then the rally can continue, I am watching Gold as well, because as risk aversion falls, the value of Gold will drop which can mean money flows into stock markets again.
I read an update this morning from Deutsche Bank stating they expect EURUSD to head further down towards parity as they expect ECBto provide some surprises. Once again bullish for equities. So the stories are combining and supporting further strength in equities at the moment.
Short term we are BULLISH above 9300 and we are making higher highs and higher lows on the 30 minute chart.
Longer Term we are still BEARISH below 9950 and we have been making lower lows and lower highs on the 4-hour chart.
Dax Support & Resistance
|200 Day EMA||10333|