Dax defends the key support
|In the past few weeks, DAX has certainly been stronger than the American indices. On Friday, when American indices collapsed breaking major supports, DAX was trading relatively strong, still fighting on a crucial horizontal area. Monday brings a nice reversal and, may we say, right on time!
In February, DAX created a head and shoulders formation (yellow). This was not positive, but the sell signal was not triggered yet. Compare it, for example, to S&P 500, who managed to break the mid-term up trendline on Friday, effectively turning the sentiment negative. DAX is still trading above the neckline (purple) and above the long-term up-trendline (blue) that has been connecting higher lows since September 2022.
As long as we stay above the two supports (neckline and up-trendline), the sentiment remains positive and DAX has a high chance to set a new long-term high. The closest resistance is currently the black line connecting the top of the head with the right shoulder. The price breaking above the black line would be a nice buy signal and with today’s bounce, it looks like the base scenario for DAX.
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