20:46 DAX drops to new Cycle Lows
The German DAX index was dragged lower by negative sentiment and crashed 2.5% on Thursday, with the price dropping to new cycle lows, which may be considered as a confirmation of the long-term bearish trend and trading at around 10,900 EUR ahead of the US session.
The current decline is very steep, but according to the RSI indicator, the index still hasn’t reached oversold conditions. However, there is a bullish divergence between the RSI indicator and the price and if sentiment improves, we could see some higher prices over the next days.
On the downside, the next major support could be located near 10,800 EUR, where the highs of summer 2016 are located. If this level is taken out as well, the index could decline toward 10,500 EUR pretty quickly.
Bears will be defending previous lows of 11,050 EUR and if this resistance doesn’t hold, further rise toward the downtrend line slightly above 11,200 EUR could occur.
US bonds and JPY crosses remain down on the day, which supports the bearish bias for the rest of day.
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