Technical Analysis - DAX 30

After the break below 6990 the DAX sold off hard. Between 6300 and 6550 is very good support. Two gaps are still open which could be closed before a much bigger sell-off. Resistance on the way up is definitely 6990. Above that level the chances are pretty good to retest 7400. On the other hand below 6200 there is no bigger support level until 5800. With that high volatility we are talking about much bigger moves. I think it is a little bit scary that the DAX dropped nearly as much in three days as it gained between October 2010 and February 2011.

Nevertheless I think that the lows from today should hold for a few days at least. One reason is if you are counting the downward move from the highs of the year to the low in June as wave A, the bounce back up to 7523 as wave B and the decline since than as wave C, then wave C reached its 1.618 extension. Furthermore the S&P 500 touched its 38.2% retracement from last year's low to this year's high and formed a bullish hammer on high volume today.

Technical Analysis - DAX 30

The DAX closed on the lows of the day so not a very impressive action. Now the gap at 6961 is fully closed. I want to show you the arithmetic chart of the DAX on a daily basis since mid 2008. Since the lows of summer 2009 the DAX formed a nice upward trend. The index nearly reached that trendline which is just below the exponential and simple 200 day moving averages. Former declines during this uptrend always stopped at this trendline and around the 200 day moving averages. So watch out if the DAX breaks below the drawn trendline and afterwards below 6800.

Now I want to show you the chart on a closing basis. This chart shows that the XETRA DAX should not close below 6950. Sometimes the trendline on a closing basis are getting violated before trendlines in candlestick charts do. So this could be a good indication in what direction the DAX will head.

On the weekly chart you can see this trendchannel too but more important are the exponential and simple 50 week moving averages. They provided pretty good support in the past.

Last but not least a chart on a weekly closing basis of the DAX. Here you can see that the DAX should not close below 7145 on a weekly basis to keep the upward channel intact.

Technical Analysis - DAX 30

The DAX 30 gapped up on positive news out of the US but gave up all its gains and is now down 2%. On positive thing I want to mention, the DAX nearly closed the old gap at 6960 and had a high volume sell off. So all in all I think a temporary bottom could be in place. The S&P 500 retested its 200 day moving average and bounced off it and the VIX never went positive during this sell-off. So the market felt some panic but stabilized.
Nevertheless the DAX should close above 7050 but at least above 7000 today. A close below would be bearish in my view.
After such a sell-off it is quite hard to define targets to the upside but there is still the gap at 7389 which could be closed before a steeper correction.
Quick add: in the very short term another test of today's lows could happen but they should hold as support.