DAX selloff poses questions
The DAX broke below the important 11,749 support level yesterday, raising the possibility of a period of weakness for the index. That said, with the price rallying into the 76.4% retracement, we are at a point which holds interest for both bulls and bears.
Those expecting a selloff will perceive this as a good selling opportunity. Although given the recent strength, it is not sure that we will see the sellers come in here. As such, it makes sense to see how price responds to this 11,818-11,848 region. A break back above 11,848 would provide a renewed bullish outlook. However, a rejection of this 76.4% retracement could provide us with a period of weakness for the index.
Dow uptrend shows no signs of stopping
The Dow has pushed to yet another all-time high overnight, with the price currently within a very shallow retracement of 23.6%. Should that represent the total retracement, a break back through 20,654 would provide us with a good buy signal, with a small stop below the 20,618 level.
Alternately, a continued move lower would simply represent a buying opportunity for the index, with a bullish outlook remaining in place unless there is a price break below 20,498.