DAX 30/CAC 40 Technical Highlights
- DAX 30 trading around record high, looking to break on through
- CAC 40 looking to trade to best levels since 2007
DAX 30 trading around record high, looking to break on through
The DAX has spent nearly a week of trading around the record high from 2018 and January attempt to break out above the record high. It is struggling to do so, but a new record high and then some look to be just around the corner.
There is a top-side trend-line running over from November high that could be a bit of a problem in record territory, and it makes up the top-side a potential “mega-phone” pattern. A formation highlighted by increasingly larger swings in price, often thought of as being bearish; however, these patterns can lead to bullish runs to as the market gives way to stability. Bottom line, it just marks a period of growing indecision that should lead to a decisive move.
At this time, it difficult to consider a bearish path given the generally bullish tone of global stock markets, particularly in the U.S. It will require a strong move lower in the DAX and general risk appetite, with the German benchmark needing to drop below 13k before a bearish outlook can grow legs. For now, staying the course of looking for higher prices to come.
DAX 30 Daily Chart (flirting with breakout to record high)
CAC 40 looking to trade to best levels since 2007
The CAC 40 isn’t set up as bullishly as the DAX, but nevertheless is looking to make an important high with a little bit more of a rally. A breakout above 6109 will have the French benchmark closing in on the 2007 peak at 6168. This seems the path for now, but there are a couple of potentially bearish scenarios.
Should we see the CAC stop at the January high and turn down a double-top could form if weakness develops below 5800. Alternatively, the CAC could carve out a right shoulder of a head-and-shoulders pattern, but price will need to turn down immediately and trade below the neckline running higher from December and below 5800.
The bearish patterns aren’t the higher probability outcomes at this time, though, so staying the course here until we see the CAC alongside its closely tied counterpart, the DAX, and global markets as a whole start to weaken.
CAC 40 Daily Chart (new highs look to be soon)
Want to learn more about trading the DAX? Check out ‘How to Trade the DAX’, and join me weekly for technical updates in the Indices and Commodities webinar.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
