FXCM's weekly DAX CFD, GER30, has pulled back to the 61.8% retracement (blue horizontal) of the previous impulse move. The impulse has a lower peak (LP) followed by a lower trough (LT) - a downtrend. This retracement level overlaps with price support turned resistance (green shaded horizontal). We also note that last week's candle is an inverse hammer. I.e. bulls took the price up to the high for the week before losing control to the bears. Moreover, last week closed well off its high.
The RSI is also below 50, which is the bearish side of the oscillator. If it continues at these levels, bears may be looking to short into the pullback, given the confluence of resistance. We are cautious as we assess if another lower peak (LP?) charts in the downtrend. This top may set up a potential bear-market rally which can be very damaging to participants.
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.