Rally is losing power
On the intraday chart (15min) of DAX we can spot a few signals of weakness in the up move we have witnessed last week:
- T1 trend line was broken and retested - this price pattern is often formed at local tops/bottoms.
- 5,750 resistance level was tested twice and the sellers overcame the buyers. The rally seems to lose its power.
- Bearish divergence on RSI that usually forms at the end of an up-swing.
In case of a further down move, the target zone is set between the 38.2 and 50% retracement (5,440-5,510).
On the 4 hour chart (below) DAX index has clearly formed a strong base that can lead to a longer rally in the next weeks. The main target for this possible rally is the 50% retracement area in the 6,340 zone. According to Elliott Wave theory, wave 2 (which is in progress) will develop in three ([a]-[b]-[c]) sub-waves.
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