DAX takes a break after great October opening

After two extremely successful bullish days on the DAX, it’s time for an update! October started really great for the German instrument but color us un-amused. We were expecting a strong upswing right after the breakout of the upper line of the channel down formation, which we highlighted in our previous analysis:

“That’s the case here, one can either trade the bounce of the upper line of the channel down formation (sell) or the breakout (buy).

I guess Friday won’t bring us a solution here and we will have to wait for the first days of October. Nevertheless, it’s worth adding DAX to your watchlist.”

Dax surged in the past two days. The price was even able to break the resistance on the 12450 (grey). It also managed to retrace precisely 50% of the most recent bearish leg down. Wednesday brings us a drop, which is rather a normal and largely anticipated correction. As for the potential target, we can consider the afore-mentioned 12450 points. There is a chance that the price will go down a bit deeper towards the 38,2% Fibo (red).

The current short-term sentiment is rather negative but the one in the mid-term, thanks to the last two days, is positive. Is it a hard bottom or maybe just a fake bullish reversal? We’ll possibly find out really soon.