DAX: Hanging Around Support, Broader Pattern Coming into View
- 10100/000 support under siege
- Trading remains difficult, but clarity could present itself if a broad triangle comes into shape
- Support levels not far below will need to hold for this scenario to become reality
The last time we examined the DAX we were noting the possible higher low developing which could lead to an advance to new 2016 highs. That view is currently under siege and looking less likely now as the critical area of 10100/000 is being rigorously tested. This area needs to hold in order for the DAX to maintain a near-term bullish stance. A break below will provide reason to shift our focus towards lower prices.
Even if support does give way, though, a decline could quickly become halted with the help of the trend-line running north off the February 11 low; currently in the vicinity of 9970. Looking just below there, we have another angle of support around 9925 at this time.
If we connect the April and May peaks along with the April and May bottoms, we can see price converging towards a possible triangle. A development which would be most welcomed on this end, as it could provide meaningful indications on the next major market move.
Getting back to the current support at hand: It hasn’t broken yet, so we can’t rule it out as holding and seeing a turn higher soon. Generally, the price action is difficult to get a handle on at this time, but shorting into support is not advisable, it never is. If a trader holds a bullish view, then the 10100/000 area is the spot to look for the market to turn higher, and if it doesn’t we know where the line in the sand lies.
DAX (Ger30) Daily
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---Written by Paul Robinson, Market Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.