DAX extends the bearish correction
15 December 2022
A crazy week is slowly coming to an end. We saw a lot of chunky rate hikes, volatility, and momentum. Indices are approaching the end of this week on the back foot with a potentially promising mid-term sell signal.
A key trading session happened on DAX on Tuesday. The index was climbing higher in the first half of the day, reaching a key horizontal resistance of 14800 points (yellow). Then the CPI data from the US came and that crashed the mood on the Stock market. To be honest, in my opinion, traders were just looking for a reason to start a bearish correction after a recent marvelous upswing and they got one. If it was not CPI, then they would probably find something else.
Nevertheless, the correction started and started with a nice shooting star candle (blue). Today’s interest decisions from SNB, BoE, and ECB and further comments from Christine Lagarde crashed the sentiment further. Weak retail sales data from the US also did not help. Quite the opposite.
DAX managed to reach the first horizontal support, so 23,6% Fibonacci and the top from the 17th of August. In case of a breakout, the next target will the 38,2% Fibonacci and a top from the 13th of September. The chances that we will get there are quite high.