Seems Like 12300 Killed the Whole Demand on the DAX

Since the end of June, DAX has huge problems to continue to long-term up trend and is undergoing a long bearish correction. From the fundamental point of view, we are influenced here by several factors. First of all, we do have a strong Euro, which is hurting German exporters. What is more, we do have car making industry, which recently received a heavy blow. On top of that, American sanctions towards the Russia are also undermining several European businesses.

Technically, the recent correction is a typical wedge, so it still has a bullish potential. The problem can be here the fact that there is no real willingness to end this correction and despite many tries, the price did not manage to break the upper line of this formation. Since the end of July, we do have a real sideways trend here, which isn’t the best place to be in. The sideways trend is restricted by two important S/R levels. From the top, the resistance is the red area around the 12300 points. From the bottom, it is the black line connecting recent higher lows combined with the horizontal area around the 12080 (blue).

On Monday we opened with a gap, which most probably will be closed as this is a typical movement, often seen in Frankfurt.

Break out one of those two should give us a proper trading signal. If the daily candlestick will close above the red area, that would mean a buy signal. Closing below the blue area will mean a sell signal. So for now, patient traders wait but in this case, patience can be highly rewarded.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis