Good morning traders!
Five consecutive bearish candles have Dax bears in jovial mood, spurred on by the increasingly worrying situation developing in China. Around 700 points have been shed and we have crashed through and closed below some significant fib levels, but above the key 11,000 psychological level. So the Dax’s armour is being pierced slowly but surely and the question is how long will it go on for.
The last time we saw this level of bearish activity (regarding the consecutive number of bearish candles) was back in April where a similar pattern of accelerating bearish momentum was seen, so there could be a slowing down tomorrow, perhaps even a pullback. On the bigger picture however, the weekly chart, there is certainly further room to downside that we can move into and still be within normal limits, so yet again I may have to sit out and wait for the elusive reversal signal.
My H4 chart RSI (21 periods) looks heavily oversold at the moment so a pullback would be welcome. Bulls will perhaps be taking longs from current levels, with stops under key support looking for at least a pullback up to 11350+ and bears will perhaps acknowledge a pullback may occur and add to positions from higher levels.
Watch the video below for more:
Dax Support & Resistance
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