The index continues to move lower after a possible bearish divergence was identified

Taking a look at the Dax 40 as the German index continues to move lower, we can see that now it has moved below its 20-day moving average. Currently, the index is trading at around 18,531. The support in focus is now the level of 18,513, which is gradually being approached. A break below this level would then shift the focus towards the 50MA (blue), this moving average at the moment reads 18,299. The 50MA would act as a key point, as some sort of consolidation would be likely given the improved global sentiment. However, the direction from there and out would have to be analysed at the time. Given that the sentiment on the daily timeframe has shifted somewhat towards bearish, it would be unreliable to point out any resistance levels. Although, a move back above the 20MA would increase the likelihood for a resumption higher. The 20MA currently reads 18,698. The MACD remains negative as it slides lower, the bearish divergence mentioned in our previous post on the Dax seems to have taken place. This does not mean that the index will now significantly decline, but it suggested that momentum on the daily chart was stalling and a small pullback was a possibility. So far, it has been. Regarding the RSI, it’s now back to neutral as it reads 49.