DAX - German Index - Starting To Look Bullish Again
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The German DAX(GDAXI) is giving mixed signals on different time frames, whilst looking weak on the daily chart it is certainly showing signs of resilience on a weekly chart.
I have attached a weekly chart of the DAX(GDAXI), it clearly illustrates that we broke out of the down trend at the triple top level at 5100, which also coincides with the negation of the downward sloping trend line.
What I want to point out is that if we utilise our fibonacci retracement tool we will find that each retracement before the next leg up since march has been 38.2% on the weekly chart. For e.g. if we take the low of the wick in march 2009 at 3956 to the high in June 2009 at 5177, a 38.2% Fibonacci retracement equates to 4573. Once again if we take the low of the wick at 4514 in July 2009 to the high in October 2009 at 5901, the Fibonacci retracement 38.2% equates to 5371 which coincides with the 20 moving average and the upward sloping trend line.
If we study the top 5 companies in terms of index weighting, namely Allianz(ALVG), Deutsche Bank(DBKGN), E.ON(EONG), Siemens(SIEGN) and Daimler(DCXGN) which equate to 40% of the Dax(GDAXI). They are all trading above their 200 moving averages respectively, and do not show any apparent signs of any abject failure.
The Dax(GDAXI) has to breach 5371 in order for this remarkable rally to be over. If we breach 5371 then it will be classed as an outside bar and the next target is 5100 on the down side, where previous resistance would now equals support.
