Breakout seems valid but pace too steep

The ~120 days DAX technical trading range (10 250 – 10 800) was finally destroyed at the beginning of this week. The breakout seems valid but the current pace is in my opinion somewhat too steep. That is, we should expect DAX to consolidate or a re-test of the 10800 breakout level coming up next.

The momentum in the current breakout is though very strong. When looking at previous events with similar strong momentum moves, the odds for a near term future higher high is very likely.

A 10800 test would mean ~-3,5% pullback. Breakout levels are quite often tested but I somewhat doubt that we will get such a deep pullback right now. A re-test of 11 000 -level is though very much likely, also expect strange whip saw trading around that level since it is a magic 1K level.

And yes – I’m only focusing here on technical analysis of the price. Is it strange that stocks are moving higher although Italy might exit the EU-project ..or what happened to the Deutsche Bank problems.. ..or the Italian banks? Perhaps it is but that is a different story for another time and not much you and me can do anything about.


DAX 1H CHART. Note the previously strong momentum moves.