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DAX Breaks Above A Downside Resistance Line

By JFD TeamStock MarketsMay 31, 2022 07:56AM ET
www.investing.com/analysis/dax-breaks-above-a-downside-resistance-line-200625105
DAX Breaks Above A Downside Resistance Line
By JFD Team   |  May 31, 2022 07:56AM ET
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The German DAX index traded higher the last few days, breaking above the downside resistance line drawn from the high of Jan. 5. The advance was stopped near the 14600 zone, marked by the high of Apr. 21, but the index stayed above that last downside line. Thus, as long as this is the case, we will consider the short-term outlook to be cautiously optimistic.

A break above 14600 could target the key territory of 14900, hit as resistance on Mar. 29, and acted as key support between May 4, 2021, and Feb. 14, 2022. However, we would like to see the bulls overcoming that zone before becoming more optimistic about further advances.

If so, the next stop may be at 15230, marked by the high of Feb. 21, the break of which could carry extensions towards the high of Feb. 2, at 15740. Another break, above 15740, may encourage participants to climb towards the record high of around 16285, hit on Nov. 19 and Jan. 4.

Shifting attention to our short-term oscillators, we see that the RSI moved higher but flattened slightly below its 70 line, while the MACD, although below both its zero and trigger lines, shows signs of topping. Both indicators detect slowing upside speed, which suggests that a setback may be looming before the next leg north, perhaps even below 14310.

Nonetheless, to start examining whether the bears have gained complete control again, we would like to see an apparent dip below 13275, marked by the low of May 10. This will confirm the index’s return below the downside line and may trigger declines towards the 12425 zone, marked by the low of Mar. 7.

If there are no buyers near that territory either, we may experience extensions towards the low of Oct. 30, 2020.

DAX daily chart technical analysis.
DAX daily chart technical analysis.

DAX Breaks Above A Downside Resistance Line
 

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DAX Breaks Above A Downside Resistance Line

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