Dax – Falls Lower, Approaching Major Support Zone
As we wrote about in our daily market commentary yesterday, we suspected the Dax would remain weak, since it was showing the greatest amount of weakness compared to all the other European indices. After forming a corrective structure on the 4hr chart, the German index sold off making new swing lows today, sub 9100. It is the only major European index to make a new swing low on the day.
Now the European index is approaching a major support zone between 9066 and 8904. I suspect unless the shorts want to try and ram through these levels, they will cover a fair amount of shorts, creating a small bounce or corrective move off this support zone.
Should such a weak bounce ensue, then look to sell on rallies. If 8900 folds while geo-political events cause a further tumble and risk off continuation, then we could see a much greater unwinding towards 8500, so watch for breakout pullback setups if 8900 collapses.
