DAX breakout falters
The DAX has broken back into its January range, with the index failing to build on the breakout seen around two weeks ago. The support zone of 11,521-11,530 remains relevant, as highlighted by the low on 31 January. The break below trendline and horizontal support (11,602) this morning is a sign that we could see further losses, with an hourly close below 11,602 pointing towards another challenge of the 11,530 region.
But, looking at the wider picture, there is a good chance this current pullback is a short-term period of weakness before we move higher again. With the 76.4% retracement at 11,536 (last week’s low), it could provide us with a good opportunity to get long according to the wider trend.
Dow hesitates following sharp rally
The Dow Jones is pausing off the back of a sharp financials led rally on Friday. There is a good chance the current price action is simply a consolidation ahead of another leg higher. However, there is a chance we could see a sizeable retracement, given the sharp rate of incline on Friday.
As such, an hourly close above 20,078 would provide a short-term bullish signal, yet a break back below 20,035 could point towards a short-term retracement. Ultimately, a bullish view is in place, unless we see a break back below 19,806.