DAX: Momentum Slows, but Trend Remains Higher
- Momentum has slowed in the DAX, but trend still up
- Decline into support viewed as likely to be bought
- Eyeing resistance around 10900 before more meaningful decline may set in
The mutli-week rally in the DAX is showing signs of momentum slowing, with the net change amounting to basically zero since shooting higher by 2.5% last Tuesday. Yesterday’s small reversal day created a little doubt heading into today, but no significant resistance has yet been met, so the minor decline off yesterday’s highs looks likely to be short-lived before another push higher takes shape.
The area around 10900 is targeted before a more meaningful decline may set in; 10876 represents the 12/29 high, while not far above lies the upper parallel to the trend-line extending off the 2/11 low under the 6/24 ‘Brexit’ mini-crash low.
Trend-line support below 10600 is viewed as the next best spot to look for the DAX to turn higher. If it doesn’t, then support should come in around the April peak just beneath 10500. If the advance is to continue towards the next objective surrounding 10900, then the DAX shouldn’t fall much beneath the April high.
DAX (Ger30) Daily
Short-term overbought in a strong tape coupled with a low volume summer trading environment is not making for the most ideal trading conditions. We will continue to take it slow until volume and volatility picks up; likely in early to mid-September.
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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.