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DAX and CAC 40 Technical Outlook: Leading Global Rally Higher for Now

DAX and CAC 40 Technical Outlook: Leading Global Rally Higher for Now

Paul Robinson, Strategist

DAX/CAC Technical Highlights:

  • DAX & CAC are global leaders and looks to have more room on the upside
  • While more upside is anticipated in the near-term, rally is seen as likely to fail
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DAX and CAC 40 Technical Outlook: Leading Global Rally Higher

The DAX outlook is still bullish as it continues to be a global leader in the global stock market recovery, and while some more upside does look to be in store the rally in the near-term it is anticipated that it will fail. Working with the broader thesis that we are in a prolonged bear market, rallies will happen and be tradeable, but the downside risk overall should be greater if this theme is proven correct.

With that said, however, there still looks to be some juice left on the top-side. Further strength could take the DAX up to what I consider to be meaningful resistance. This comes by way of the trend-line off the Jan high that was recently validated in August as the DAX turned strongly lower off of it.

The line currently resides around the 13100 level. This leaves about 400-450 points of room to the upside. If we see stocks take a sharp dive from here with the US participating strongly, then we may have seen the end of the bounce. For now, it looks like we have another leg up before that happens.

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DAX Daily Chart

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DAX Chart by TradingView

The CAC is trading around a trend-line from the August peak, making it a near-term level of resistance to pay attention to since it seems to be a bit of a problem area. A break above 6140 could open the door towards the similar trend-line as the DAX, but this line is currently in almost exact alignment with the 200-day MA. This would be viewed as a major level of resistance should it get met.

CAC Daily Chart

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CAC 40 Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.