DAX: Pressing Resistance Zone Once Again
- The DAX is attempting to push above resistance again
- Broadening pattern could develop with further strength, but merely a scenario at this time
- Trend still higher off post EU referendum retest, will need to see another rejection at key levels to renew selling interest
Yesterday, the DAX started to make good on the reversal bar put in on Monday, but rebounded during the late-day, and today we are seeing some solid buying pressure with the German index once again trying to push back above the top of the 10000/100 zone penciled in as resistance. Will it be a retest of Monday’s reversal and turn back lower or can the DAX stay above?
The trend the past couple of weeks has been higher since the retest of the post EU referendum low, but resistance in the before mentioned zone still puts the current advance at risk. If the DAX can close strongly above 10100 today and take out the Monday high at 10165, then the resistance between roughly 10250 and 10350 will come into view.
Yesterday’s low came in right around the 7/13 pivot on the hourly chart. If the market moves up to the top-side trend-line we were noting in Tuesday’s commentary, then we could be forming a broadening top of the advance off the earlier month lows. The top of the pattern would also coincide with the 10250 level, which could make for nice confluence.
But in the very near-term, a close above resistance still leaves room to go before a broadening top could take shape – it’s merely a scenario at this time. As long as yesterday’s low and the 7/13 low right around 9900 holds then the market will still remain somewhat bullishly postured.
Given how the DAX has traded in recent months – strong rallies sold, strong dips bought – there is pause to chase higher from a swing-trade standpoint. But from a much short-term standpoint, it will be difficult to fight the current advance if we don’t quickly see a move back lower from here. We would either need to see another failure with strength around 10100 or a push to the next level of resistance before shorting interest will be renewed.
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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.