Technical overview: DE30

Summary:
- DE30 launched new week lower
- A move towards the 161.8% Fibo level of the latest upward impulse may be on the cards
- Price is testing range of the recent bounce higher on the H1 interval

Futures on global equity markets launched Monday’s session with downward price gaps. Taking a look at the DE30 (DAX futures underlying) chart on D1 interval we can see that the upward trend structure has been broken. According to the overbalance methodology, sell-off may deepen as current pullback has already exceeded the range of the 2 previous corrective moves. The index began moving within a short-term downward trend and may be set to test the 11350 pts area in case the move is continued. Bearish scenario would be invalidated once the index breaks above the 11900 pts handle.

Source: xStation5

Taking a look at the lower frame - H4 - we can see that downward move accelerated after breaking below the support level near the 11900 pts handle and as long as the price remains below this hurdle, the outlook favors bears. Of course, it is possible that buyers will try to “close” today’s downward gap but overall trend hints at a move lower therefore any long positions are subject to a bigger risk now. Over the course of the upcoming days we may witness extension of a downward move towards the 161.8% Fibo level of the upward move from 14-17 May.

Source: xStation5

Moving onto the H1 interval one can see that the index has found itself in an interesting spot. An upward move started on Monday morning brought the price to the close vicinity of the 11715 pts handle. A break above this hurdle could hint on an extended move higher as the range of the previous short-term bounce higher would be exceeded. Nevertheless, one can see that the second to last candlestick on the chart below saw price moving above this handle and later pulling back below it - a sign that bears are holding firm in the vicinity of a swing level from Friday’s afternoon.

Source: xStation5