DAX is the German index heavily traded in Germany. It is considered the key indicator for the performance of other stock bucket in the Frankfurt stock exchange.

- Market structure: Market has taken a downward spiral on the Monday opening. Currently resting at $15090 at the major support, we anticipate a move up from here for a corrective leg only to follow the downward direction further. At this major level, going for a long position is viable. We will confluence other parameters for the strength of the long position.

- Trendline: DAX has earlier broken the ascending trendline, which capsulated a 6 month time frame. The higher the time bracket of a breakout, the stronger the trend swift is reflects. At the moment, there is no trendline in play other than the breakout sell trendline.

- Retracement: At the major support, we have the golden retracement area of 75-78.6%. DAX is hovering around this area. This gives us a second confirmation to position ourselves in buys.

- EMA's: EMA 50 has been pierced leaving a retest behind. This breakout needs to be tested with the EMA 50. This test is what we are anticipating at the current levels of DAX. EMA 200 is still below the current market prices. After the correction has been done, we will look at the test of the EMA 200 later.

- RSI/CCI: RSI is at 35, whereas, CCI is extended in the over-sold zone at -190. CCI composition of over sold region gains strength for the any instrument to neutralize its sell pressure, which in this case, is the DAX.

DAX structure turned bearish when it broke the $15,450 support level. At the current level, the major support will push the DAX up to retest the EMA 50, the area we will book our profits. Also, we have 3 confirmations on this trade: support, retracement and CCI being oversold. The CCI confirmation is weak compared to other technical aspects. This makes the corrective bullish buy trade risky.

DAX fuelling up for a bearish correction

Jul 19 2021