DAX consolidates after double-bottom
The index has finally seen some respite to the selling which has personified the index so far this month, with a break through 9608 resistance. This completed a double-bottom formation, bringing with it a projected target of 9718.
However, for now price has become stuck below the 1 April low of 9674, which will need to be broken to revive the bullish momentum of yesterday. As such, a closed hourly candle above 9674 would look towards 9718. Until then, any continued drift lower would look towards 9607 (double bottom neckline and 38.2% retracement) as the key support level to hold for another move higher. Should it not hold, a deeper retracement of 9566 (61.8%) or 9541 (76.4%) would come into question.
Dow rally follows failed break lower
Yesterday’s rally came following a fakeout below 17,572, highlighting the importance of a closed hourly candle to signify a break. We have since created a new higher-high on the hourly chart and with the index currently consolidating, this looking likely to be a brief period of respite before another move higher.
An inside trendline and 38.2% confluence of support could provide a sufficient base for another move higher, yet a break through that area would look towards deeper pullbacks around 17,659 and 17,643. The deeper the pullback, the better long entry risk profile and thus a move back towards the 76.4% retracement may not be such a bad thing for bullish positions.
Whether that happens or not remains to be seen, but we are within a clearly defined uptrend and last night’s rally has provided fresh impetus for further gains, with 17,726 and 17,769 the next major resistance levels.