Summary:

• Improving risk environment across Europe help DAX (DE30 on xStation5) bounce back from a key support line
• Despite a double bottom pattern further declines remain on the cards
• 13080 points could be a key level to watch when it comes to seeking potential tipping points

The last two weeks saw massive deterioration of risk sentiment, however the European equity markets were hit the most. The beginning to the week has been upbeat for the DE30 in spite of the fact that Angela Merkel has failed to forge a govt thus far and therefore a snap election could be the sole proper decision to leave a political stalemate. Nevertheless it looks as if investors have played down those risks zooming in on the economic performance being in well condition and monetary policy which still supports of stock buyers. Let us remind that the European Central Bank chose to extend its QE program until September 2018 lowering monthly purchases of assets to 30 billion EUR at the same time. 

Weekly (W1)

The current weekly candlestick has been already able to wipe off all losses made last week as bulls have been buoyed by better risk sentiment. That said, there is still a likelihood of a deeper pullback even toward 12000 points.

The current weekly candlestick has already erased all losses made last week. Source: xStation5

4-hour (H4)

A closer look at the chart unveils that declines have been halted by a relevant support zone being underpinned by the peak from June and a 38.2% retracement. On top of that, it needs to underline that this place served as a springboard for an increase we saw in October (an effect of the ECB’s decision). Thus, there is a chance that the price will try to break 13500 points once again.

The DE30 rebounds from a notable support area. Source: xStation5

Hourly (H1)

The chart below illustrates that the price is forming a double bottom pattern nearby 13335 points. However, one needs to take into account that the ongoing rise could be just a correction of the earlier downward wave. If so buyers could run into more substantial obstacles close to 50% and 61.8% retracements. Beside price action it’s also worth taking a look at RSI which is approaching the line suggesting overbought.

The German index is nearing its more notable resistances. Source: xStation5

15-minute (M15)

From an intraday outlook one can notice that the largest pullback has had ca. 58 points so far. Based on the overbalance strategy we could assume that any deeper pullback could herald a change in the short-term trend. 13080 points remain one of the key supports to watch.

The biggest pullback in the ongoing upward move has had 58 points. Source: xStation5