Technical Analysis - DAX 30 and EUROSTOXX 50

The DAX 30 struggled during its upward move and sold off yesterday. Today the DAX gapped down and is now on the way to close the gap. In the next few days I am still expecting a move down to at least 6990/7000 and more likely down to the drawn trendchannel around 6940. That move down would finally close the gap at 6960. An overshoot to the downside to 6900 is possible but daily close below this trendline would be very bearish. Be very cautious around the 7000 area because a move below 6980/6990 would definitely hit many stops and 6940 could be reached within minutes.
A move back above 7300 during this week would be impressive and then my favourite scenario would be a retest of the 7500 level. Remember trade small positions because the headline risk is huge. A resolution in the debt talks in US and the markets could surge or on the other side a downgrade of the US and the markets could tank.

The EUROSTOXX 50 does not look as robust as the DAX 30 does. Since August 2009 the EUROSTOXX 50 has been moving sideways between 2500 and 3000. Since summer 2010 the index formed an upward trend which broke in May 2011. In July the EUROSTOXX retested this trend once again and failed. In my opinion the index will retest 2500 and if this level holds even a retest of 3000 is possible. If the EUROSTOXX 50 falls below 2500 a test of the 61.8% retracement around 2270 is imminent.

Technical Analysis - DAX 30 and EUROSTOXX 50

As I mentioned last week I was expecting a pullback. We got a selloff. Nevertheless today the DAX 30 made a nice reversal on high volume like in March. I would have liked an intraday break of 6990 but you have a nice level to of support and a high volume reversal. So at least for the short term I think we could head higher. Very critical is 6990. A break below would hit many stops and the index could even gap intraday.

The EUROSTOXX 50 sold off hard during the last three sessions but found support at 2600. This level has to hold over the next few days. An upside target would be a gap close at 2800.
A very critical level in the S&P 500 Futures is 1294/1295. Watch these levels for defining the trend.

Technical Analysis - DAX 30 and S&P 500

The DAX moved slightly up during the last two days but overall nothing really changed. The daily candles indicate some uncertainty. I am still expecting a move back down to 7320 at least maybe even 7250 before moving up to 7800. My upside target is the upper trendline shown in the chart.

The S&P 500 moved straight up since last week and nearly reached the highs of this year. I think some consolidation is necessary. Support should be around 1330, 1311 and 1294. Any consolidation should not go lower than 1294.

Technical Analysis - DAX 30 and S&P 500

The DAX ran into some resistance around 7440 to 7460. The 76.4% retracement of the forgoing downward move is there and the highs from February. Today's action could be the start of some consolidation. A break above today's highs on a closing basis would be very bullish. Support should be at 7310/7320 and below there 7230/7250.

The S&P 500 reached a very interesting level after that impressive rally. The uptrend from the March 2009 lows on a logarithmic scale is around 1340/1345 so maybe this was just a bearish retest of the broken trendline.

On a shorter timeframe the S&P 500 also reached the 76.4% retracement of the foregoing downtrend. Moreover there is a significant resistance area between 1340/1345 as you can see on the chart below. At this level the S&P 500 has been rejected four times since February. Ideally the S&P 500 will consolidate but does not break below 1294.

Technical Analysis - DAX 30 and S&P 500

The DAX reached last Friday my first target of 7410 and ideally will consolidate over the next few days below 7450 and above 7320 and below that above 7200. Below there a test of 7080 or lower could happen.
Because of a rising upper trendline in the hourly chart the chances of a continuation of this steep rally are very little. Nevertheless a break above 7460 on Monday (adding 30 points per day to this trendline) would send the index probably up to 7600 within a very short period. In the chart below I showed a very stable trend channel since summer 2009. Since 2011 I think the DAX is forming a rising wedge which could indicate the end of this uptrend on a higher timeframe. At this moment I am expecting a last break above the upper wedge trendline which is actually around 7700. I do not have a precisely timeframe for that scenario but I think it should happen in 2011. But that does not mean that after the mentioned last break above the wedge-line the market has to sell off immediately.

The S&P 500 should also find some resistance around 1345 to 1350 after this very impressive rally last week. Very critical for the bulls is the 1294 level. It should definitely hold otherwise I think we could see lower prices than in June. But for now I think there is no need to get involved at these levels if you have missed this move. For sure it depends on your timeframe.