The German DAX index was dragged lower by negative sentiment
and crashed 2.5% on Thursday, with the price dropping to new cycle lows, which
may be considered as a confirmation of the long-term bearish trend and trading
at around 10,900 EUR ahead of the US session.
The current decline is very steep, but according to the RSI
indicator, the index still hasn’t reached oversold conditions. However, there
is a bullish divergence between the RSI indicator and the price and if sentiment
improves, we could see some higher prices over the next days.
On the downside, the next major support could be located
near 10,800 EUR, where the highs of summer 2016 are located. If this level is
taken out as well, the index could decline toward 10,500 EUR pretty quickly.
Bears will be defending previous lows of 11,050 EUR and if
this resistance doesn’t hold, further rise toward the downtrend line slightly
above 11,200 EUR could occur.
US bonds and JPY crosses remain down on the day, which
supports the bearish bias for the rest of day.
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