Today we will come back to DAX, which we were analysing at the beginning of the year. Back in that time, the price was meeting a combination of few important supports and that was the time to decide about the mid-term faith of this instrument. In our analysis, we stated that:
“Yesterday, the day ended with a nice hammer candlestick. Today this movements is continued and the price is making higher highs and lows. That creates a setup where we have many positive aspects at once: candlestick formation, technical pattern, trendline and a horizontal support. Hard to find a better technical setup than that. As long as we stay above the lows from yesterday, the sentiment is positive and the buy signal is on.”
The buy signal was on indeed. The price climbed over 500 points higher and managed to break the upper line of the wedge. That confirmed the positive sentiment towards the German Index. Only worrying fact here can be that DAX is relatively weaker than the American or British counterparties. S&P 500 or FTSE are in a much better condition but DAX is trying to catch up. Most recently, the price made a small bearish correction, just to test the upper line of the wedge as a closest support. First contact with this area was positive and the price stayed above, drawing a long tail on a daily candle. We will see in what moods we will start the European session but it should be rather a positive session for buyers. As well as the whole week ahead.
As long as we stay above the orange support, the sentiment is positive and the chance for a further upswing is much higher.
