Bottom line: DAX long term structure continues to remain bearish against 13800 mark. The indice has managed to reach final fibonacci retracement around 13120/30 levels. This is accompanied with a strong bearish divergence.

 Fundamental Outlook:

DAX has managed to open the week on a strong footing by rising close to +1.0% yesterday. The indices closed around 13073 and futures are trading above 13130 mark as we prepare to publish this update. The indice might be taking its cues from the Dow Jones and SPX500, as risk appetite returns.

WTI Crude has been stalled just below the $41.50 mark and has been trading in a tight range since last several trading sessions. Oil prices might come under renewed selling pressure with Q2 earnings in focus. The fragile investor sentiment might weigh on Oil prices going forward.

Gold hits fresh highs yet again around $1820 levels. The yellow metal might be poised to gain further if the US Dollar continues to decline. The DXY (US Dollar Index) had print 95.63 lows during early hours of trade today, before pulling back.

Technical Analysis:

DAX futures continued to surprise most traders by printing yet another high around 13120/30 levels. Believe it or not, the recent rally might just be the much needed bull trap before the indice could reverse sharply lower again.

DAX had earlier dropped between 13800 and 7950, in an impulse wave. As an ideal scenario, the impulse drop has been followed by a corrective rally towards 13120/30 levels today. A high probability remains for a bearish reversal from current levels.

DAX has also reached the fibonacci 0.88 retracement of the above drop, around 13120/30 mark. This zone is marked as the final resistance level. A reversal from here should be sharp and quick as bears prepare to resume lower soon.

Most traders might be initiating fresh short positions around current levels 13100/30, with protective stops above 13800 and projected targets below 7900 levels respectively. Bottom line: DAX should stay below 13800 to keep the bearish structure intact.

Prepared by

Harsh Japee, Technical Analyst.

DAX Chart

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