DAX Is On The Back Ropes

After the DAX failed to hold above 11,800, Friday’s bearish engulfing candle saw the index break beneath its bullish channel and prior swing low. With the bias remaining bearish beneath Friday’s high, we see its potential to head towards 10,900.

We outlined the two scenarios for the DAX in our prior analysis, CAC, DAX Could Make Quite The Pair and price action is now playing in line with the bearish bias. We wanted to see a clear break above the 11,800/50 area before becoming bullish. And that filter has allowed us to avoid the false break above its 200-day eMA last week. Moreover, Friday’s bearish engulfing candle closed beneath the bullish channel, 50-day eMA and prior swing low to suggest further downside could be ahead for the DAX.

Compared to most of its peers, the DAX has been one of the weaker performers during this year’s recovery, only being underperformed by the FTSE. Up just +8.5% from the lows, its clearly struggling to keep up with the US counterparts. Therefore, if we are to see widespread weakness from equity markets, DAX is theoretically a better short than the strong performers. And with bond yields weighing on sentiment, it’s plausible that we could be about to embark on another leg lower across equity markets.

 

 

 

 

City Index: Spread Betting, CFD and Forex Trading on 12,000+ global markets including Indices, Shares, Forex and Bitcoin.Click here to find out more..

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Ltd. ADVFN Ltd does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

WHAT IS ADVFN?

ADVFN covers all things stock market.

From the news and opinion pieces on pages like this to share discussion forums, charting tools, financials, live share prices and Level 2, order book data

If you trade or invest ADVFN has the tools you need to make the right decisions.

• 

  101 Ways to Pick Stock Market Winners

  You need the number one bestselling investment guide, the definitive text for day traders, investors and stock pickers.

• 

  The Death of Wealth

  Dissecting the global economy and the financial markets, the book lays out the evidence for the next economic game changer: the Death of Wealth.

• 

  Kiana Danial

• 

  Envion

• 

  Clem Chambers

• 

  IQ Option