DAX 30, CAC 40 Forecast: Indecision Creeps in, Bears Try to Regain Control
Key Talking Points:
- DAX 30 struggles to break higher, bears seem to be regaining control
- CAC 40 loses bullish momentum at a new attempt to break above 5,700
Coming back to the DAX 30 after four days of trading, the further correction I mentioned on Monday has tried to materialize, but there hasn’t been enough bearish pressure to bring the index below horizontal support at 13,825. We’re still seeing this relative optimism in markets as things are good but not too good so that there will be enough stimulus need to support the economy in the near-term, but bullish momentum is starting to look vulnerable and we could eventually get this awaited correction.
Overbought conditions have cooled slightly, which takes the selling pressure of the DAX 30 for now, but another rejection at an attempt to push higher in yesterday’s session does show increased bearish control. We could end up seeing consolidation between 14,140 and 13,825 in the short-term, but a sustained break of either of these two bounds is likely to increase momentum and set up for a bigger move.
DAX 30 Daily chart
The French stock index has been following a similar pattern where it lacks the support to break higher but seems to be well supported in the short-term, confining it to a tight range. 5,705 continues to be a strong resistance whilst 5,640 is seen as immediate support. Momentum indicators are showing that oversold conditions have now been restated so we could see further buying support, although we would need to see a sustained break above 5,720 to consider a wider move higher.
CAC 40 Daily Chart
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.