Don’t Tell Merkel – The DAX is Below Critical Levels

Angela Merkel joins a toast with a beer

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Clearly Angela Merkel has ramped up the partying with the continued bounce in the German DAX. She was drinking one mug when I talked about the possibility of a retest of the breakdown levels here last week. And as the DAX passed through the breakdown zone she moved to the double-fisted stance above.

dax

But I am sorry to tell you Angela (if you can still hear me after all those beers), that the DAX is not clear of trouble yet. In fact if you can see the chart above mein Chancellor, there are two things to watch for before you can loosen the lederhosen and start singing songs. First is that pesky purple line, the 20 day SMA. A close above that, and even better over 9200, will be a victory more fun than when East and West Berlin were reunited. Second look for the RSI to climb and stay above the mid line and preferably over 60. Until these happen, maybe you should put down the beers and have a few sausages to sober up. The down side is still a big risk.

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