DAX back to inside trendline
The DAX has been respecting an inside trendline this morning, as the index threatens to form a bearish head and shoulders formation. For that to come into fruition, we would need to see a break back below 12,704. Thus an hourly close below that level would provide us with a bearish short-term view.
However, until that occurs, we continue to trend upwards in the wake of Monday’s downturn. With that in mind, an hourly close above 12,749 would point towards another round of gains for the index.
Dow at bottom of its range
The Dow Jones has returned to the bottom of its range once more overnight, with the early April peak of 20,888 coming into play. We are confronted with two options here. On one side, the past three weeks of the price action could be a double top formation, pointing towards a retracement of the rally from 20,375. A projected target would take us past the 61.8% retracement of 20,641.
On the other side, we could see this range continue apace, which would call for a bullish turnaround in the near future. Given that an entry at 20,888 with a stop below 20,846 would provide a 3/4-to-1 trade, this could be an interesting value proposition. With that in mind, a bullish outlook is in play unless we break below 20,846.