In my previous post on DAX30 Index, I warned of a short and choppy road ahead with limited upside. DAX30 Index among other major equity indices then remained in more or less “pause-mode” with narrow trading ranges and vanishing momentum. So far, DAX30 Index has reached and exceeded my intermediate price target of 11’775 and was even able to post a new 20-month high at 11’893. This sounds all great great, BUT when looking at momentum, it does not look too promising, at least for the moment. In fact, despite the recent higher high in price, momentum (RSI 14) made a lower high and is therefore not confirming the price. This is not considered as healthy and warns of a possible consolidation. But a definite confirmation of such a consolidation can only be called when price falls through important supports/trendline. In the case of DAX30 Index, the supporting momentum trendline is already broken (warning!) and I now await 11’700 level to be broken before I act. If 11’700 area gets breached, I see downside to 11’435 and 10’800 (fibonacci retracement). I reckon DAX30 Index to remain within trading channel (green) for a while with 10’200 as an absolute low. On the longer term, I remain bullish and expect a test of 12’400 until June 2017 (likely in May/early June).
Conclusion: Do not chase upside in DAX30 Index, go short if 11’700 is breached (intermediate target 11’435).