DAX drops toward important bullish trend line


Wednesday has been a negative day so far for equities, and the German DAX was down nearly one percent during the US session, trading at around 12,620 EUR.

The index is quickly dropping toward the critical support of the Summer uptrend line. This trend line is currently near 12,530 EUR, and DAX must stay above this level to remain in a medium-term uptrend. 

What is already negative is that DAX failed to post higher highs for some months now, indicating the bull market might be running out of steam. 

If DAX drops below the trend line, stop losses will be hit, which might push the index further lower toward 12,200 EUR. If bears push the price below that level, the medium-term trend could change to bearish, targeting the 11,600 EUR support.

Alternatively, if the fiscal stimulus deal is reached today and stocks start rallying, DAX needs to climb above 12,800 EUR to ease the selling pressure.

The next resistance could be at 13,000 EUR and afterward at October' highs of 13,165 EUR.
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