Major indices are currently fighting to end the week on a positive note. What’s important is it’s not happening in random places. For example, on the DAX, we’re currently bouncing off a critical long-term horizontal support.
This week, the DAX tested and bounced off crucial, long-term support on 12450 points (yellow). We established that level in March, which was tested for the first time at the beginning of July. This week brought us a third test and actually a third bounce. That shows us that the support can be considered a rock solid one, and creates an occasion for a great buy with a very desirable risk to reward ratio.
If you’re not convinced yet, then maybe wait for a breakout from the blue line first. The blue line is a mid-term down trendline and breaking it would be an anticipated confirmation, which would significantly increase the chances for a further rise. We’re in a bear market, so naturally sentiment has to be negative. However, the fact that we’re bouncing off such a great support allows us to be positive in the short-term, and that’s our current, short-term view on this German index.