Dax Prices Beaten Down by Technical Headwinds

German Dax Talking Points:DAX prices plunge after rising to a 12-month high of 15705 in yesterdays sessionThe German 40 index sinks below 15400, driving the CCI back from overbought territoryEuropean equities face challenging times as critical resistance firms

Dax futures are currently trading around 15320, down by 1.64% for the day (at the time of writing). With prices plunging from yesterdays 12-month high of 15705, the major European index has shed a large portion of last weeks gains that initiated the bullish breakout.

As Dax prices head toward Fibonacci support at 15296, the 88% retracement from the 2020 move continues to play a significant role in driving momentum. While this level helped provide resistance throughout January, the weekly chart below highlights how this zone has come back into play as support.

Dax Weekly Chart

Following a 2.07% rally in prices last week, Dax futures managed to clear prior resistance at support, allowing prices to retest 15500. With price action temporarily stalling around 15529, a move higher in yesterdays session allowed buyers to drive prices higher before peaking at 15705.

A retest of 15700 meant that Dax futures had bounced back to the pre-war levels, a 32% increase from the October low.

With the February 2022 high resting at 15731, a rejection of 15705 sent prices lower. As Dax fell below the April 2021 high of 15529, the daily CCI (commodity channel index) retraced from overbought territory.

Dax Daily Chart

Going into todays session, technical headwinds remained firm, suppressing bullish momentum.

After opening at a level of 15484, Dax rose to a daily high of 15523 before surrendering gains. As bulls failed to establish a firm hold above 15500, bears were quick to respond, driving price action lower. On the hourly chart, the shift in momentum was illustrated by the shallow body that appeared at the bottom of a long wick. In technical analysis, this suggests a strong retaliation from sellers to restrict the upside move.

Dax Hourly Chart

Meanwhile, as prices grapple with major technical support, a deeper correction could see prices declining further. If Dax breaks 15296, the next level of support holds at 15157 which could open the door for a bearish continuation towards psychological support at 15000.

Support:Resistance:S1: 15,296R1: 15,400S2: 15,157R2: 15,500S3: 15,000R3: 15,529