DAX continues trading inside of the channel down formation
The last week of September has definitely been a treat for short-term speculators. We had amazing moves all over the market including major indices. Take for example our hero today – DAX. It made new long-term lows while trying to end this week on a positive note being close to a promising buy signal.
The DAX remains in a beautiful channel down formation (blue), which started on September 12th. A breakout to the upside would be a technical signal to buy. Of course, for now in a mid-term first. Today, the price is testing the upper line of this formation but so far without bullish success.
As long as DAX remains in the channel down pattern, dominant sentiment is of course still negative. The price bouncing off the resistance can be a very promising sell signal in line with the long-term trend. That’s the case here, one can either trade the bounce of the upper line of the channel down formation (sell) or the breakout (buy).
I guess Friday won’t bring us a solution here and we will have to wait for the first days of October. Nevertheless, it’s worth adding DAX to your watchlist.
Remember that the breakout of the channel down pattern will just be step one. Around 12450 points, we have a long-term key horizontal resistance, which has a potential to stop any rise. Its breakout would be really significant for the long-term situation on DAX but chances for that now are rather limited.
Author
Tomasz Wisniewski
Axiory Global Ltd.
Tomasz was born in Warsaw, Poland on 25th October, 1985.
