DAX: 50DMA break puts downside levels in playThe Germany 40 contract is trading through the 50-day simple moving average, a level that’s been tested frequently over the past month but never closed below until Wednesday. Should the price be unable to reclaim the level, a short setup may be in order.
While some may be prepared to establish shorts beneath the 50DMA with a tight stop above for protection, the preference would be to see the price push meaningfully below 24000 given how many times it bounced from beneath the level when trading above the 50DMA over the past month.
Bids may be found at 23800 and again at 23620, the latter coinciding with the uptrend running from the June swing low. Ultimately, however, 23400 screens as a more appealing target given it’s where the price bounced strongly from earlier this month.
Of course, if the price were to reverse back above the 50DMA and close there, the setup could be flipped with longs established above and a stop beneath for protection. The downtrend from the record highs set on July 10 sits just beneath 24400 today, making that a potential target. 24530 is another, coinciding with where the price stalled on four separate occasions since July 23.
RSI (14) is trending lower and now sits beneath 50, providing a slightly bearish signal. However, it’s yet to be confirmed by MACD, which remains in positive territory despite crossing over from above earlier this week. The overall momentum signal is therefore neutral, placing more emphasis on price action to guide trading decisions.
Good luck!
DS
