DAX consolidates but bulls need to hold the upside break

DAX Xetra (cash index)

With risk appetite improving the DAX has posted a second consecutive strong bull candle and the move has broken a six week downtrend.

The big question is whether the bulls can now continue the move higher to make a sustainable recovery.

This rally has seen the market close well above the near term pivot resistance at 12,283 whilst eh 23.6% Fibonacci retracement of the big sell-off becomes a basis of support at 12,248.

Momentum indicators reflect the improvement but still suggest there is more that needs to be done.

The RSI is still struggling under 50 as the market has consolidated today, whilst the MACD lines have only just ticked slightly higher.

Bulls now need to back up this move with another higher daily low above 12,248 whilst traders consolidate early today ahead of Non-farm Payrolls.

On the hourly chart there is a more positive configuration forming on momentum, but still the RSI needs to push above 70 to suggest a real strength in the move.

  • There is a near term uptrend formation and the higher low from yesterday at 12,180 is now important for the recovery.
  • Yesterday’s high at 12,382 is initial resistance, whilst a decisive move clear from the 23.6% Fib level opens the 38.2% Fib at 12,505.
  • The late February reaction high at 12,601 remains key resistance.