DAX
Dax index opened the new trading year on a bullish note – it gapped higher at the opening. While at this time of the trading day, it corrects, the break higher took place above the neckline of an inverse head and shoulders pattern. Effectively, it means that the bullish bias on the Dax index remains as long as the price holds above the pattern’s neckline.
The end of 2020 brought another leg higher on the U.S. equity markets as the Dow Jones in the United States closed at record highs. At the same time, the Euro corrected a bit, if we consider that the EURUSD pair dropped a hundred points in the last trading day of the year, and the EURGBP and EURAUD did the same.
This may be a theme for 2021, considering that the Dax still lags the price action seen in the U.S. indices. If the Euro’s weakness continues, the Dax may easily try for the inversed head and shoulders’ measured move.
The technical picture remains bullish while the Dax index holds above 13,600. Only a move below 13,000 will invalidate the bullish case, so bulls would likely step in and go long on any dip. The focus here is on the series of higher highs and higher lows – it should hold until the Dax reaches the measured move..
