DAX's Ambiguous Outlook: Will the Bullish Hope Prevail?
27 June 2023
In today's analysis, we focus on the German DAX index, which attempted a promising reversal yesterday. The effectiveness of this move, however, is yet to be seen in the mid-term.
Here's what happened: since June 16th, the DAX has been in a bearish correction. Yesterday, this correction hit a key horizontal support at 15700 points (orange). Upon reaching this support, the price bounced back, forming a hammer pattern on the daily chart, highlighted in yellow.
Earlier today, buyers attempted to continue this reversal. However, we are currently hovering close to the daily lows. So how can we interpret this situation? As long as the price stays above the orange area, the sentiment remains positive, offering a glimmer of hope to buyers for a potential bounce.
On the flip side, if the price closes below the orange area, this could trigger a strong long-term sell signal. This becomes particularly relevant when we consider that last week's price dropped below the long-term uptrend line, denoted by the black color on the chart. Therefore, as long as the price stays above the orange area, buyers can maintain hope for a new bullish wave.