DAX Bounces off a Crucial Support

Tuesday’s been pretty bad for the DAX so far, but the second half of the day could bring better news as the end of the European session signals a light at the end of the tunnel.

In general, the last several days were great for the German index. A crucial thing happened on July 14^th when the price bounced from the 12440 support, which currently serves as an unbreakable bullish stronghold. One day later the price managed to break the mid-term down trendline (blue), which confirmed a buy signal.

DAX peaked on July 20^th, and since then, we’ve had a bearish correction which was beautifully shaped like a flag (green). Today, the DAX is testing the lower line of the flag and the first reaction was a bounce. Worth mentioning is that besides the lower line of the flag, we have a 38,2% Fibonacci in the same place, as well as a support coming from the local tops from July 8^th and 18^th (blue).

As long as the price stays above the blue area, the sentiment is positive, and the situation looks promising for the buyers.