The Dax broke above its bearish trend-defining level yesterday with positive price action. The questions to ask now will be whether or not the buyers are strong enough to continue this sustained pressure to build momentum through 12000. Or perhaps whether sellers are simply waiting to sell the rally.

The daily chart shows that yesterday’s retracement has reached the midpoint of the previous compression pattern. One significant fact for bulls is that the overall daily gain yesterday was around 50% higher than the typical average daily range. But let’s not forget that the DAX has already dumped nearly 700 points recently, it would be normal and healthy for a market to retrace some of those losses.

DAX Hourly Chart

Keep an eye on price action around the upper median line parallel of this fork line set. I am not suggesting that these lines are guaranteed to see a turnaround, but they have been controlling price action since the beginning of May. On the 60 Minute chart you can see how we have broken above 11 923, which was the bearish trend defining level. This would normally suggest the price action will continue to move in the direction of that momentum. However after such a big move, in comparison to recent price action, you could just as easily see an intraday retracement, before another move higher.

DAX Intraday Levels

Price took off yesterday morning around the European open and barely looked back. I find it interesting how price action used both the point of control and the pivot as its launch pad. Once it broke above the previous day’s high it seemed to gather momentum. today we get even higher than yesterday tie didn’t make any progress in the overnight session and have now, around the European Open, crash back inside the value area from yesterday, tagged the point of control, and I now threatening to break down towards the daily pivot. If price manages to hold above 950, it would be interesting to see whether it can consolidate and hold the gains up here. But it’s asking a lot because as you will notice on the composite profile to the right there is not a lot of volume between current price action at 965 and the high volume area down at 700.