Technical
DAX – Large head and shoulders top pattern suggests further downside.
Weekly: The index has formed a large head and shoulders top pattern. The rally in recent weeks has led to a retest of the neckline of the top pattern. This also coincides with a 50% Fibonacci level at 11743. A rejection at this level suggests that the corrective move higher is about to end. The measured move of the head and shoulders top comes in at 9803.
Daily: Price action has formed a bullish ending wedge formation. Selling continued from the 50% pullback level of 11745. Price action has posted a bearish Engulfing Candle and is negative for short-term sentiment. Bespoke resistance is located at 11704. Preferred trade is to sell into rallies.
Intraday: Broken out of the channel formation to the downside. A lower correction is expected. A break of 11565 is needed to confirm follow through negative momentum. Negative overnight flows lead to an expectation of a weaker open this morning. Further downside is expected.
Action: We look to sell on rallies to 11660
Stop: Stops to be placed at 11860
Targets: 10285 & 9805
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