German DAX index: Pausing for a breather
The German Dax index rose 25% from its lows in early October, delivering nine weeks of gains and outperforming US stock indices. The bullish price action has been rather sharp for a market that had a 27% decline from its top in the first nine months of the year.
In November 2022, the Dax saw overbought RSI for the first time in over a year and the index also managed to surpass quite easily its 50-day and 200-day moving averages, as well as a significant 50% Fibonacci threshold of 2022's low to high.
As prices now meet fierce resistance in surpassing the 61.8% Fibonacci level around 14,560 points, a pullback is possible in the following weeks.
The first area of support is located at the psychological level of 14,000. This level might serve as a solid test for validating the 50% Fibonacci level breakout occurred in November.
If the Dax fails to remain above 14,000, bears may gain impetus and push the price down below 13,500 (38.2% Fibonacci and 200-day moving average).
Currently, the strong 61.8% Fibonacci level resistance dominates the upside. If prices broke over this level, the June high of 14,700 would be the next resistance. However, with two important central banks meeting in less than two weeks (Fed on the 14 and ECB on the 15), the upside room for bulls may be limited here.
In November 2022, the Dax saw overbought RSI for the first time in over a year and the index also managed to surpass quite easily its 50-day and 200-day moving averages, as well as a significant 50% Fibonacci threshold of 2022's low to high.
As prices now meet fierce resistance in surpassing the 61.8% Fibonacci level around 14,560 points, a pullback is possible in the following weeks.
The first area of support is located at the psychological level of 14,000. This level might serve as a solid test for validating the 50% Fibonacci level breakout occurred in November.
If the Dax fails to remain above 14,000, bears may gain impetus and push the price down below 13,500 (38.2% Fibonacci and 200-day moving average).
Currently, the strong 61.8% Fibonacci level resistance dominates the upside. If prices broke over this level, the June high of 14,700 would be the next resistance. However, with two important central banks meeting in less than two weeks (Fed on the 14 and ECB on the 15), the upside room for bulls may be limited here.
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