DAX index – still struggling to rally
I keep repeating that I do not believe in sudden surge of stock markets after U.S. midterms. None of the fundamental reasons that sparked the stock sell-off in October have disappeared. Last days’ mantra “Divided Congress is good for markets” is more of wishful thinking. Stocks can go up or down – anyway, we are traders and we will trade what we see.
That said, looks like risk-off returned. Equities are going south after the Fed reiterated its plans to hike rates. Early morning Asian risk-off sentiment has spilled over to Europe and also US index futures are also in decline.
On 4H charts, we see price declines again after failing to take 11660 area twice. Now we can expect bounce from 11405, which will be tested probably again. I will sell rallies from 11530, 11550 and 11660 especially. Downward pressure is still big and rallies face a lot of resistance. Of course, buyers can try tactical longs from current levels with stop loss below 11405, but this is a risky trade.
We will yet to see price action today after US open, but on a weekly chart it looks like this and next week we will see price to approach again kay level of previous lows – around 11050. If that is a case, the breaking below is very likely and correction will continue.
Have a nice weekend ahead and safe trades !