Dax continues its aggressive rally, now approaching the 76.4% Fib level. However, the RSI is now suggesting the index is a little overbought

Taking a look at the Dax 40 as it has now recorded 3 straight weeks in the green. Currently, the German index is trading at around 15,922 and if we apply the Fibonacci retracement to the chart, we can see that it is approaching the resistance level of 16,073 (76.4% fib). This will be a tough level to overcome as we can see that between August and September, the index tried to move higher but was rejected on a couple of occasions. Nevertheless, in the short-mid term if a break and close above the 76.4% fib does occur, we would then look at a potential move towards the 100% Fib (16,532). Which is also the index's all-time high. We now have a wide range of hopefully strong support levels down below due to this rally, with the first level sitting at 15,786 (61.8% fib). A break below this level could see a correction lower towards the 50% fib (15,560) and maybe even the 38.2% fib, however, the 38.2% fib (38.2%) is rather unlikely at this moment in time. There is a possibility that we could see the Dax form a reversed head and shoulder formation, especially if we look at the RSI. But, it is too early to make such an analysis. If we look over to the technical indicators, we can see that the outlook remains highly bullish with the MACD now way above the 0-line and its moving average pretty distant from the signal line. The RSI is also positive as it reads 76, however, it is important to note that the RSI is now suggesting that this market is oversold. This may see some profit-taking as well as pressure from the bears.