CityIndex

The DAX could retrace further from its ‘bull market’ threshold

Long
XETR:DAX   DAX Index
The DAX entered a technical bull market on Tuesday by closing just over 20% higher from its September low. I have lost count the amount of times I have seen a market pull back from the 20% threshold (which is based on no logic that I can see, other than being a nice round number) – so that is just the first clue that the DAX could pull back further.

But we also saw two Doji candles leading into the high, prices were rising on lower volume , and a bearish divergence has formed on the stochastic oscillator. Therefore, the bias is for a retracement towards the 14,000 area whilst prices remains beneath 14,440. At which point we can re-evaluate its potential for a move up to the 14,709 high. A break above this week’s high assumes bullish continuation.

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