DAX confirms bullish bias

We can clearly see that the quotes have dipped below a major level of horizontal support at 8900, but were not able to stay down for a long period before trading resumed above this crucial support level. The price action suggests a rally is imminent as the index closed significantly above 8900 forming a bullish engulfing pattern on a daily basis as well as confirming 8900 as solid support. Our technical expectations are for a rally towards the prior highs around 10044.50.

Fundamentally the picture is mixed with the ECB keeping interest rates low in an attempt to stave of low inflation in the eurozone. Furthermore, towards Christmas we expect a stock market rally due to increased overall consumption.

If we see prices trading again below 8900 the scenario would turn to bearish and probably result in another test of support at 8350. 

Report by (Zhivko Yordanov) 

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