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The DAX cooled off in yesterday’s session off the back of higher-than-expected German inflation data.
With analysis expecting the Year-on-Year rate to fall to 6%, the actual number was higher at 6.2%. This has raised some concerns over the fight against inflation in Germany, putting an end to the three-day green streak for the DAX.
Technically, price bounced nicely off the support zone around 15,500-15,600. This level has acted as both a key area of resistance and support in the past 6 months.
Since the first breakout above that zone in March, price has been ranging sideways ever since. Multiple attempts to break and hold above the January 2022 high have failed, and the recent sell-off coincided nicely at the mid-range level.
From a purely support and resistance technical view, there are two scenarios that could occur. The first would be a fall back down to the key support level around 15,600. The second could be a positive catalyst news even that kicks price through the mid-range resistance level and back up towards the January 2022 high for a 4th attempt at breaking through.
Since the recent low 2 weeks ago, the price action formed a more bullish market structure on the lower timeframes. We’ve seen a clean higher high and higher low. While this bullish structure holds, bulls could remain in control.
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