State of DAX for Calender Week 41
Welcome to this week's blog post about the state of the DAX. Those who follow us on Twitter might have seen a tweet from Wednesday, stating that there are small signs that the current situations might become better soon:
Shortly afterwards, the DAX began it's climb on the chart. Are we out of the trouble yet? Let's determine that by looking at the index from different perspectives.
Technical Chart for DAX
As usual, we'll start with the technical chart for DAX,created on tradingview.com:
The SMA 200 band has provided a confident level of support and the DAX managed to climb above the resistance levels 15 270 and 15 500. Also, the falling trendline was crossed. At the moment, we are still looking at a series of falling highs within a downtrend, and the DAX can only escape this situation when closing above 15 700.
It might be that the DAX will manage to do so soon, however, currently the price is trading just below the upper Envelope band which is usually a zone that gives overbought signals. It might happen that the DAX will have a small pull-back. Currently, the DAX is above its SMA 20 again, and the chart will send even more positive signals, if it stays like that.
Also, the SMA 200 will be rising during the next days, starting to put more pressure on the index to stay above a certain level. It could be that we will see a fight between buyers and sellers for the zone around 15 300.
One word regarding the RSI: The DAX made it above 50.
Technical summary: Looking much better than last week, but we are not off the hook yet.
Market Breadth Data for DAX
After we've looked at the technical perspective, we should consider the market breadth data for DAX40:
Nothing to say about the Advance Decline Line for DAX.
The McClellan Oscillator for DAX reached high values above the zero line - bullish.
The McClellan Summation Index stopped declining and goes upwards again.
Market breadth data no longer provides bearish signals. Indication is slightly bullish.
SMA Market Breadth Data for DAX
A look at market breadth would not be complete without looking at how
many members/components of the DAX40 trade above their SMA50, SMA 100
and SMA200:
Currently, 40% of the DAX components trade above their SMA 50 (last week: 25%),
Currently, 52,5% of the DAX members trade above their SMA 100 (last week: 37,5).
Currently, 62,5% of the DAX components trade above their SMA 200 (last week: 60%).
3/3 indicators improved compared to last week. But looking at the history of those indicators, it is clear that their values are still low in comparison April, Mai and June.
Those SMA market breadth indicators still give slightly bullish signals, meaning that we might have seen the worst.
Summary
Formally, and based on my opinion, the DAX must overcome the old falling high at ~ 15 700 to end the ongoing correction. But we already see that the index started its recovery, and at least at the moment it would be unlikely that the correction will be continued with lower lows.
To prevent overheating, the DAX needs to execute a small pull-back before rising further.
At the moment, the outlook changed from ⬇ to ➡
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