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Apr 7, 2021, 10:06 AM GMT

The Ecstatic Rally of the DAX About to be Checked

German stocks have been rallying over the past couple of weeks, ever since the publication of the latest industrial numbers in Germany, which proved to be quite robust. The rally of the DAX was further supported by the recuperation of the euro over the last several days. Despite the persisting bullish bias as of late, however, the DAX index's uptrend, which currently finds itself near its all-time high, looks poised to be checked.

The relatively low liquidity levels in the market this week set ideal conditions for the emergence of a bearish correction on the ecstatic rally of the DAX, thereby checking the overextended bullish pressure. In other words, this week's subdued trading volume that was brought about by the comparatively uneventful economic calendar is likely to prompt a minor bearish correction in an otherwise very strong bullish uptrend.

1. Long-Term Outlook:

As regards the current technical outlook, the strength of the bullish trend can be inferred from the daily price chart below. As shown, the underlying price action is diverging away from the latest bullish cloud, as demonstrated by the Ichimoku Cloud indicator, thereby signifying the strong bullish commitment in the market. The cloud itself serves as a floating support area, as well as the blue and red lines that also comprise the Ichimoku tool.

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