Market transitions are tricky to call and will only be confirmed after the fact. This difficulty is because markets don't move in a straight line but will zig and zag as their trend unfolds. Therefore, the current DAX rally may be a correction in the more significant bear trend.
Nevertheless, FXCM's DAX CFD, GER30, show encouraging signs in the weekly time frame. Price has moved from its bearish zone, between the lower blue and red bands, into the neutral area (green rectangle). On a relative basis, this is a bullish development. This action may indicate that the market views the DAX as representing value at current levels. This current leg will be corrective if it slips back into the bearish zone. However, this is speculative, at this point.
Shorter Timeframe Analysis
The GER30's daily chart on the left is positive. The index is trading between the upper blue and red bands in its bullish area. Moreover, its stochastic is above 80 and holding (green rectangle), indicating an underlying positive momentum. As long as the oscillator maintains these levels, momentum will be supportive.
The hourly chart on the right shows bullish developments too. The trend-following EMAs and stochastic have both crossed positively (black ellipses). If the oscillator moves to the 80 levels and holds (blue arrow), momentum will be upwards. This support, in effect, may lead to the index's next positive swing. However, a failure of the indicator to reach the upper quintile will suggest that this advantage has waned.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.