The German stock exchange index DAX managed to take advantage of the latest gain in the US and reached new YTD highs last week. However, looking at the daily frame one can see that the upward momentum has eased as of late. Although the price remains above local peak from early-May, there is a risk of correction occuring. This is especially true now as the US indices gave back some of the recent gains. Currently, Dax trades within the upward channel and as long as the price is above the level of 12 450 points, bulls seem to be in favour. On the other hand, a break below this hurdle could trigger a longer-lasting decline.
Source: xStation5Moving onto the H4 interval, one can see that the price has recently made two corrections of equal range. Market geometry (1:1) is localized at the lower limit of the breakout zone (12415 pts) therefore a break lower could be treated as a signal for bears. Additionally, it should be note that the price remains above the 77-period moving average, which is another argument for supporting buyers. Currently, the moving average runs in line with the 1:1 structure, trend line and the support zone in the area of 12 450 points.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
Source: xStation5Last but not least, taking a look at the intraday interval - H1 interval - the trend reversal pattern can be spotted. A potential head and shoulders pattern is building up. A break above the short-term resistance zone ranging 12575-12600 pts would invalidate this technical setup. In case the setup is played out in a textbook manner, there is a chance for the price to go down to 12450 points or even 12415 points. However, the market needs to beat the neckline first. 
Source: xStation5
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
