DAX: Continues to Test Support, Price Action 'Wedging Up'
- The DAX is testing and holding support so far
- Pullback wedging up, watching for a possible break
- End of summer trading conditions still persist
The DAX continues to hold after last Monday’s retest and rejection of confluence of support between roughly here and the mid-10300s. As we have discussed before, there are several intermediate to long-term levels in the vicinity. (April, May, and June peaks and 2011 trend-line the market spent much of the year beneath.)
The gradual decline since the 8/15 peak suggests a healthy correction thus far. It will be important, though, now that the index is firmly testing support that it soon turns higher without slipping below.
On Friday, U.S. markets saw sizable volatility sparked as the Fed’s Yellen gave mixed to more hawkish than expected signaling in her Jackson Hole speech. The volatility naturally spilled over into Europe in the final couple of hours of trade. In the end, though, it wasn’t a chart altering event.
Heading into this week, the pullback is wedging up a bit on the 2-hour chart. Further sideways trade towards an apex and eventual break above the top-side trend-line could help spur along another leg higher. A break below 10386 (last Monday low) will turn the picture more cautious (for the longs).
Traders still need to be mindful of seasonality – volume and volatility, outside of isolated events, remains low and is making for difficult trading conditions. Soon, market participants will begin to file back in from summer vacation and activity will pick up. Until then, we need to be selective and patient in letting the market ‘come to us’ when waiting for our trade set-ups.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
You can email him at firstname.lastname@example.org with any questions or comments.
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