Summary:
- DAX (DE30) pulls back after reaching 200-week moving average and the 61.8% Fibo level
- The German index trades within an uptrend channel
- A decline towards the 11800 pts handle can be on cards
The beginning of the new week on the global stock markets is far from good for bulls. Indices all around the world are pulling back amid threat of trade war escalation. DAX (DE30) is no exception. The German index pulled back after reaching the 200-week moving average and the 61.8% Fibo level of the latest major leg lower. As one can see on the chart below, tests of the aforementioned moving average were often followed by reversals (red circles). However, some kind of a deeper pullback could be justified given stunning rally started at the turn of the year.
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile app
Source: xStation5
Moving onto a daily frame, one can see that the resistance zone around the 12400 pts handle is additionally being strengthened by the upper limit of the upward channel. Potential range of the pullback in case the index was to reverse may take the price as low as to 11800 pts handle. In this area one can find 50-session moving averages channel and the 200-session moving average, what may prove to be a hurdle for sellers (red circle on the chart below).
Source: xStation5
Some kind of a correction seems to be justified by both, technical and fundamental factors. Having said that, we can try to look for levels where bulls may become more active. The first such level can be found in the 12000 pts area. Apart from being the psychological levels, it is also being marked by the 38.2% retracement level and the local peak from 4 April. The next support level in line can be found at 11870 pts handle (50% Fibo level and local highs/lows). Nevertheless, the lower limit of the upward channel should serve as the ultimate support level. This year’s highs around 12400 pts handle remain to be the first resistance zone to watch.
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.
