DAX extends sell-off from Fibonacci retracement
The DAX is continuing its descent, following on from a retracement into the 76.4% Fibonacci level at 11,662. Since then we have seen three deep retracements (>76.4%) followed by a 61.8% pullback. That shift away from deeper retracements into a more moderate rebound highlights the growing confidence in the bearish story.
We are likely to see further downside, yet whether we rebound in the near future or not remains to be seen. With that in mind, a short-term rebound would be a good selling opportunity if we do not see a break through the 11,568 swing high.
Dow turning lower from rising wedge pattern
The Dow Jones has been weakening off the back of a bearish rising wedge formation. The wider picture points towards the sell-off seen over the past fortnight as being a retracement of the 24,120-26,278 rally.
However, with the price having failed to respect the 61.8% retracement and then forming a rising wedge pattern, it looks likely we will head towards the 76.4% level at 24,629. A bullish theme is expected to come back into play before long, with a fall below 24,120 required to negate the medium-term bullish picture.