Bulls are losing the control and if the price falls below the downward trend line, the bulls could be in trouble.
The German DAX index has broken its downward trend line to the upside on a 4-hour time frame. This confirms that the downward trend (shown by orange line) is no longer in play and the bulls are back on the driving seat. However, it is important to mention that the price is trading very close to this downward trend line. If the price breaks the trend and falls below the downward trend line, this would confirm that the bears have taken over.
Hence, it is very critical that we keep a close eye on the RSI, relative strength index which is easing off from the overbought zone and now moving towards the oversold zone. For the sake of making things easier for us, we have the downward trend line (shown by pink line) and if the RSI breaks above this pink line, this would send us the signal that the bulls have started to build the momentum again. This will be the confirmation for the bullish trend.
We also have the reverse Head and Shoulder pattern forming, although it is not very clear, but it is there. The reverse head and shoulder pattern usually entails that the price would continue to move higher. But we still need more time for this and more confirmation.
Another bull signal for the price is that the 50-day moving average (shown in green) is trading above the 100-day moving average (shown in yellow). As long as this continues, we have higher odds for the DAX index to remain under the influence of bulls.
The support zone is shown by the green horizontal line and the resistance zone is shown by the red line.
