DAX: Fails to Hold Above Monday Reversal High, Short-term Formation in Sights
- ECB does/says nothing to spark volatility
- Failed on attempt to break above the Monday key reversal day
- Trend still up, but price instability suggests it could end soon
Yesterday, the ECB left monetary policy unchanged as expected, and largely disappointed by providing a vague outlook as to any additional measures it could take later this year or early next. The lack of any strong indication one way or another left markets relatively unchanged following the meeting. The DAX and other Eurozone equity markets and the euro all closed the day near the unchanged line.
The resulting close in the DAX formed a Doji-like reversal bar, with another failed attempt to stay above the key reversal day etched out on Monday. This indicates that sellers are in the vicinity, but the trend is still higher since the retest of the referendum lows.
The broadening top formation we have been discussing this week is working its way closer to becoming a reality. The pattern amounts to a reverse ascending wedge, which suggests growing instability as price swings increase in size with no material net gain with each new higher high. A swift move below 10100 will likely put the pattern in play and 9900 should arrive quickly. But as long as ~10100 support holds, then we must continue to respect the upward bias still in place.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.