Dax Technical Analysis 05/05/2016

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Good morning traders!

Global markets seemed to take a hit yesterday perhaps after the weaker Chinese manufacturing and a cut in Europe’s growth outlook once again ignited the fears of a global economic slowdown.

We ended up over 100 points down at 9825 and have definitely closed the gaps opened up during the April rally. We are seeing some dollar strength as US services sector picks up and this is pulling up the USDJPY and providing some headwind to the EURUSD rally.

The Dax is now also at some pretty key support on the daily chart as we touched the trend channel low with yesterday’s close and have begun the day with a bounce. There is also (at the time of writing – around 09:50GMT) a bullish continuation pattern emerging on the 30 minute chart with a “Three Rising Methods” formation. If this does not lead to a fake break out, then it could well be the opportunity that bulls were looking for especially with the momentum seemingly changing from bearish to bullish. However we have come up against the daily R1 from the daily pivot point indicator which could slow progress temporarily.

The ultra short-term play could be to sell this spike and buy from lower levels, but I personally would like to see this recent rally gain some traction.