DAX with new, long-term highs!
04 April 2023
Stock markets are not slowing down on Tuesday, with indices climbing to new, long-term highs and most of them having a fifth consecutive bullish day. We did not hear of any banking problems for a while - all this freshly printed money causing inflation has to flow somewhere and it is flowing to Wall Street!
Well, in this case, it is also flowing to Frankfurt, as the instrument of our choice today is DAX. On the chart of DAX, you can see that the whole bullish reversal happened mostly because of the inverse head-and-shoulders pattern (green) that emerged in March. On March 29, the price broke the neckline of this pattern (purple) and that gave us a legitimate, technical buy signal.
At the end of March, the price checked in on the long-term horizontal resistance (orange), i.e. the tops from February and March. It seemed that this would stop the buyers for a while but Tuesday brought about a display of bullish power and a breakout to the upside. DAX is currently on the long-term highs with a proper, long-term buy signal. The positive sentiment is here to stay as long as the price stays above the orange support. The chances of a higher rise are significant but for that, we need to see the price closing a full day above the orange area, not just an hourly candle.