Inverse head and shoulders in view for DAX
The DAX appears to be creating an inverse head and shoulders formation, with the neckline at 9918. This pattern comprises of newly ascending lows and flat lining highs, which is good to trade owing to the horizontal and thus objective nature of the neckline. Therefore a break above 9918 would point towards further recovery where the projected target comes in at 10,541.
However, such a break higher would likely point to an initial move back to 10,000 and 10,059 as the initial resistance. Should we not break above 9918, a move below 9532 would indicate a likely return to 9320.
Dow bounce comes amid mixed signs of recovery
The Dow Jones saw massive volatility yesterday, posting one of the biggest spinning top candles you’re ever likely to see! A new high followed, yet failed to regain that high of 16,359 with the move higher this morning.
However, the signs are that we could see a push towards 16,359 soon given the massive maribuzo candle being formed. Should the Dow manage to break back above 16,359, this could spark a stronger recovery towards 17,000. However, a move below 15,870 would bring about a more bearish outlook with the support levels of 15,710 and 15,250 worth watching out for.
Given the size of yesterday’s selloff, it is always going to be difficult to find the exact bottom given the propensity of markets to suddenly plummet lower again. However, there are certainly signs forming that this could be the beginning of a short term recovery at least. We just need resistance to be taken out first.