Despite the recent rally in the DAX, Andy Dodd, Head of Technical Research at Louis Capital Markets, remains bearish for German equities.

Dodd says the recent rally has reached a key resistance area where a downtrend coincides with the neckline of a longer term top head-and-shoulders pattern (see Chart and previous article). The measured target for that pattern remains around 9800. Moreover, he warns that price action over the last few sessions has left a couple of bearish candlesticks that suggest a pullback is imminent.

A close above 11,566.5 would, however, invalidate his medium- to long-term bearish view and allow for further upside towards the key 11,863 resistance level and the 200-day moving average.

See Chart.