Dax Technical Analysis 27/07/2017


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Dax Analysis

We have the longer term fork (weekly) still intact and we have seen the DAX along with the FTSE and other indices posting record highs in recent months. However, a daily bearish fork has formed which has moved down to the median line (12140) where it bounced up to a zone of interest. Remember we were talking about 336 (12336)? Well, the futures price hit that and reacted well. Now we have an interest switch back at that level from a previous median line (See Charts Below).

We are thinking that if the sellers successfully defend that level, then we could see further downside. This ties in with a bearish technical trend from the daily chart. Lower lows and lower highs. The 50 period SMA on daily time frame has been broken and is angling down currently. The 200 SMA or EMA would be the next zone of interest for bears closer to the 12000 level. A break here could have the potential to cause a strong move to the downside or create a trap.

Current outlook: Bearish below 12406/12350 zone targeting downside supports of 12141 and 12095 and ultimately 12000 in extension

Alternative scenario: Long above 12406/12350 targeting upside resistances of 12520, 12550 and 12580 in extension

DAX Outlook
DAX Outlook

FTSE analysis

The FTSE tends to be weak when the pound is strong and with talk of an upcoming rate hike gathering, we could be approaching a downturn.

In general, as interest rates are lowered, more people are able to borrow more money. The result is that consumers have more money to spend, causing the economy to grow and inflation to increase. The opposite holds true for rising interest rates. As interest rates are increased, consumers tend to save as returns from savings are higher. With less disposable income to spend as a result of the increase in savings, the economy slows and inflation decreases.

Outlook seems to favour the downside. Look for shorts below 7500 targeting downside supports of 7300,7250 and 7090 in extension.

Alternative scenario: Long above 7500 targeting upside resistances of 7596,7860, 8680 and  10,000 in extension.