DAX
Dax index gapped lower on the back of worsening pandemic news but recovered part of the losses as the U.S. stock market bounced. Judging by the pattern seen below, we may say that the Dax evolves in an inverse head and shoulders, with the market taking its time to consolidate on the right shoulder.
In other words, while inside the range, it makes no sense to take a position on the Dax. However, a break and close above or below the dynamic resistance and support levels change the picture completely.
With only a couple of trading days until the Christmas break, the chances are that we will see little or no volatility. However, low liquidity levels also means that the market may move on nothing at all.
The 13,000 level remains key for the Dax index. So far, buyers stepped in on any attempt to break lower. Should the market push through the level, the danger is that it will retrace the entire move higher that started in November with the U.S. elections. However, the inversed head and shoulders pattern typically points to higher levels, so a break of the dynamic resistance makes more sense.
Both bulls and bears have something to trade here. The only thing to do is to wait for the price to close outside of the range before entering the market.
