DAX has been unable to break above resistance at 9300 and 9400 only to pull back towards short-term support of 9150. The neckline of a possible pattern is critical for the short- and medium-term view I have about DAX. Although I expected this market to outperform and not lag behind the US indices, instead it has been trading in a range between 9150-9400.
Breaking below the red neckline support at 9150 will probably push the index back below 9000 towards 8900. On the other hand a break above 9300 will push the index higher to test previous highs at 9470 with increased chances of making a decisive break out towards 9750. With the US equities consolidating near their highs, DAX is clearly left far behind. Will it catch up or is the performance in DAX a sign of things to come? DAX bulls should watch out for a break below 9150. In order for bulls to maintain control of the trend, DAX will need to retake 9300 soon and then break 9470. Retaking 9300 will be enough I believe to fuel a strong rally as many have been trading the H&S pattern. However a H&S pattern is validated only when the neckline breaks. Not before. So many stops at the right hand shoulder will be triggered if we break 9320.
As always, thank you for taking the time to catch up on my thinking.
A technical analysis term used to describe a chart formation in which a stock's price:
1. Rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again declines.
3. And finally, rises again, but not to the second peak, and declines once more.
The first and third peaks are shoulders, and the second peak forms the head.