🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

German DAX Shows Signs of Rebound at Key Support Zone: What's Next for the Index?

Published 25/10/2023, 07:35
DE40
-

The rebound in the DAX comes after the German benchmark stock index printed a doji candle on the daily time frame inside a major long-term support zone on Monday, around 14700 (see shaded blue area on the chart). This is where the index had found strong support and resistance in the past, while the 38.2% Fibonacci retracement level of the entire rally from October 2022 also comes into play here.

A doji candle is where the opening and closing levels are roughly the same, with wicks on one or both sides of the opening and closing levels. This pattern is usually an indication of indecision (with both the bulls and the bears appear reluctant to commit to a particular direction) and can often be found at the bottom or top of trends. Given that the index had fallen for 4 consecutive days ahead of Monday’s trading, it was looking quite oversold.German 40 Daily
Source: TradingView.com

Therefore, the recovery so far this week can be attributed to an oversold bounce at support rather than anything fundamental, unless subsequent price action tells us otherwise.

So, it is quite possible we will see the return of the bears once some of the ‘oversold’ conditions are worked off. Look out for signs of reluctance from the bullish camp to commit despite this bullish-looking price action. If we don’t see a convincing move higher in the next two-three days from here, then that could be a sign that the bulls will be in trouble again.

The next level of potential resistance to watch is around 14945, which was previously support. The next potential resistance level above this is around 15130. The bulls will need to reclaim levels such as these before we can be more confident about this latest recovery attempt.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.