Short-term bearish bias
Key levels: downside: 11450 / upside: 11600
The German index has met stiff selling around last mid-October’s high of 11820. The correction has come to test the psychological level of 11400 which coincides with the 30-day MA. We can expect higher-than-usual trading activity in this area of congestion.
On the 4H chart, the bearish MA cross suggests the rally has run out of steam and a pullback is underway. Successive breaks of 11540 and 11475 are strong indications that buyers went into defensive. On the hourly chart, this morning’s bearish engulfing candle suggests that sellers have taken control of the price action and the sell-off is yet to end. The RSI indicator remains in the neutral zone and there is still room on the downside.
We could expect minor consolidation before the price resumes its downtrend for the day. A breach of 11450 might push the index towards 11400.