German Dax Talking Points:
- Dax 40 bullish breakout encouraged by a break of resistance
- German equities optimistic as prices rise above the 13500 psychological level
- USD weakness supports major stock indices as futures extend gains
German Dax Trades Above 13500 As Bulls Aim Higher
European equity futures have extended gains as a weaker US Dollar offers further reprieve for risk assets. With Dax 40 futures making a full recovery from the September sell-off, the five-week rally has assisted in driving price action above 13,500.
Although last week’s heavy economic data and rumors of China’s reopening led to additional volatility throughout global markets, the performance-based Dax ended the week with a 1.66% gain.
Dax Technical Analysis
After pushing through prior trendline resistance on the weekly chart, a brief retest of 13,036 and strong retaliation from bulls supported the upside move. As the body of last week’s candle closed above the falling wedge pattern, the 200-week MA (moving average) stepped in as support at 13364.
German Dax (FDAX1!) Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
Meanwhile, the daily chart below further highlights how prices have broken out, snapping back after a steep decline. From the October low of 11829, a move above the 38.2% Fibonacci retracement (from 2020 – 2021) at 13115 and a break of the downward trendline drove prices higher before reaching 13364. The initial rejection of this level drove prices back to the same Fibonacci zone before the formation of a doji candle and a sharp rebound drove the bullish breakout.
German Dax (FDAX1!) Daily Chart
Chart prepared by Tammy Da Costa using TradingView
With support at prior resistance, the 13500 psychological level remains key for the short-term move. As prices continue to edge higher, the 13750 area has historically provided resistance and may continue to do so for both the short and longer-term move.
But, with focus on inflation and recession fears, additional selling pressure and a drop below 13364 could bring 13115 and 13000 back to life.
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter:@Tams707
