The decline in recent sessions leave some nervousness in the air, given the possibility to be tested the important support zone that represents the minimum of August. For the particular case of DAX30, the breaking down of this support may create an inversion, with bearish implications (Please notice the illustrated ‘head and shoulders’).
This does not necessarily mean we have to watch to a ‘crash’, but it is certain that from that moment onward the price action would present Lower Highs and Lower Lows, which are not witnessed for a few months.
The charts tell us that the long-term trend remains bullish, even with the break of the mentioned support.
Dax30 daily chart:
The month of September showed us two very different weeks in the European markets, the first was a continuation of the “bullish” sentiment that began after the inversion from August 8th and the second week revealed a corrective movement that followed the strong rally.
As mentioned in the previous publication, and shown by the prices from recent sessions, the correction had not yet reached significant levels to justify any return to the rising of prices. However we may not say that this retraction will be largely expressed, therefore we can easily foresee a new attempt for the market to reach new highs, specially if we have in mind the incredible behavior of the “Locomotive” S&P 500.
Happy trading. 🙂