What’s inside:
- The DAX rebounds from support, but…
- Still viewing the market at risk of further losses
- Important support and resistance levels noted
After dropping out of an ascending wedge and below the important 10265 level we had drawn in as solid support, the DAX found buyers at another level which received much attention during July around the 10100 mark (yesterday's low was 10092).
While this level remained a good level of support yesterday, it was also expressed that we believed lower levels are to come. After flexing its muscles to the tune of about 170 points or so, the DAX is back at the 10265 mark this morning. This level received good play towards then end of July as both resistance and support, making it an important one.
In the short-run the operating bias is the DAX will likely experience more selling after the swift reversal from a confluence of longer-term levels on the daily (converging 2011 and 2015 trend-lines along with May and June tops). If the market doesn’t turn lower from around 10265, then further upside back to the mid-10300s becomes the risk. It would be at that point we would again look for the market to find sellers and reverse back lower.
Support surrounding 10100 has proved its worth, so on any decline lower we will need to pay attention to how the market responds. The next level of support below there arrives around the 10k and 9900 mark; not because they are whole numbers, but because the market has responded at these levels before.
A strong push above 10486 wipes away the bearish bias and would be considered a rather positive longer-term development, with all resistance levels having been crossed at that point from an intermediate and long-term standpoint.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
He can be emailed at instructor@dailyfx.com with any questions or comments.
