DAX Tests Major Resistance

Stocks jumped notably on Tuesday and the positive mood was also seen on Wednesday as the European indices opened higher. The DAX was trading at 0.35 per cent stronger in the morning and trading near 11,430 EUR.

The index is however testing a strong resistance of previous lows and highs. Actually, there are three zones> 11,430 EUR, 11,460 EUR and 11,500 EUR. However, if the price jumps above all three, the bearish trend could be cancelled, and a consolidation could occur, with possible bullish pressure toward 11,700 EUR.

If bulls fail at these levels, the support could be seen at the broken bearish trend line, which is currently at 11,300 EUR. If this level cracks, further decline to 11,200 EUR might occur.

There is a bullish divergence between price and the RSI indicator, which is a bullish signal and also, it looks like DAX posted a double bottom pattern, which is also a bullish formation.

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