DAX climbs back above important support

Equity markets started with a bearish gap on Sunday evening, but that was quickly closed, and optimism returned, with EU and US indices futures rising circa 1% during the London session on Monday. 

The German DAX managed to climb back above the critical support line of 12,170 EUR, and as long as the index trades above this level, the short-term outlook could be bullish. 

However, the significant support from the daily chart is at around 11,820 EUR, where the 200-day moving average is converged with the uptrend line from March lows. If the DAX remains above this level, the medium-term trend seems bullish.

Alternatively, the next resistance is near 12,450 EUR, where previous highs are located. Should the index jump above this strong barrier, the bullish outlook might be confirmed, with the next target probably near 12,760 EUR.

Sentiment was very negative heading into the weekend, leading to some strong selling and shorting, which could be precisely the incentive to push the market higher for people to cover their shorts. 
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