DAX continues to retrace within uptrend
The DAX is moving lower again today, with the index clearly in a retracement mode following a strong move higher in late March. The expectation here is that we will break to new highs once more soon, but we do not know exactly where this retracement will come into before it turns higher.
So far, we are seeing the 50% respected, yet there is a good chance we could see at least one more leg lower before we start to see the index turn higher. The price action on the stochastic has formed a falling wedge, which could provide the bullish signal, with a break higher from that pattern. As such, a bullish resolution to this current move lower is expected, as long as we do not break below 11,850. Watch the Fibonacci support levels alongside the stochastic wedge for potential reversal signals.
Dow lower after topsy-turvy 24 hours
The Dow Jones saw a sharp move higher turn into significant losses yesterday, as the ADP payrolls and Federal Open market Committee (FOMC) had very different effects upon the market. Crucially, we saw an inverse head and shoulders pattern completed, yet with the price breaking back below that 20,756 neckline, the validity of that formation comes into question.
For now we are seeing the price hold up at trendline support, where a break lower through 20,515 would provide a very bearish signal. However, until then we have seen a new high created yesterday and there is a good chance we could utilize this trendline as support to create a third higher low. As such, it could be worth looking at short intraday timeframes for signs of a bullish reversal here.