DAX bouncing after deep retracement
The DAX managed to retrace into the 70% pullback at 11,490 yesterday, with price rising in the aftermath. While there is no guarantee that this is the end of the weakness, any pullback into the 11,471-11,490 zone represents value for longs.
If we do not see a break back below 11,401, then the price action over the past ten days seems like a retracement of the rally from 11,401 to 11,696.
Could Dow rally be short-lived?
The Dow Jones has been turning over this week, with higher highs turning into lower lows. That portrays the current rally as a likely short-term period of strength, which is expected to spark another leg to the downside.
We would need to break back above 19,977 to negate this view. The wider picture portrays a potential double top in the making, with a break back below 19,720 required for that to come into play. For now, it looks likely we will see price follow on from recent reversal signals, with a bearish view confounding the bullish outlook in Europe.