DAX selloff comes under microscope today
The latter part of last week saw the price break out of the clear uptrend that has dominated markets since the 27 July low. However, with the DAX moving higher this morning, there is the possibility that we could see some form of resurgence. Ultimately I would need to see a move back above 11,584 to gain confidence that the bulls are going to come back into prominence. Until then, it is likely that we will see the price move lower yet again to continue this channeling we have seen.
The price is currently testing the 50-hour SMA, which has previously provided support and resistance. Thus, this indicator could be the spark needed to see sellers come back into play, otherwise a move above it would near enough take us to that magical 11,584 level. Should the sellers take hold yet again, I would expect a move back to the recent low of 11,480.
Dow selloff likely to continue
The Dow Jones looks very similar to the DAX. Both are channeling lower and are engaging with their 50-hour SMAs. Like the DAX, this also has a crucial level of resistance to watch for just above the 50-SMA, on this occasion 17,455. A move above this level would bring a new higher high, whereas a move lower from here would continue the lower lows and lower highs of the previous week. I favour the bearish outlook, as a continuation. However, a move above 17,455 and 17,465 would bring a little bit more of a neutral outlook. Should the sellers take hold yet again, I would look for a move back to the recent low of 17,280.