DAX: Wobbles on ECB, Trend-line Comes into Focus
- The DAX gets wobbly on ‘disappointing’ ECB outcome
- Chop continues, market participation likely to return soon
- Trend-line is bull/bear line-in-sand in the short-term
The DAX took a spill after market participants were disappointed by Draghi and the ECB’s lack of action taken at yesterday’s meeting. The German index fell about 175 points on the announcement of no policy changes and into Draghi’s press conference, but did manage to recover a sizable chunk of the day’s losses into the cash close in Frankfurt.
The chop which began in the middle of August continues, making trading conditions not the most ideal beyond very short-term trades. As we progress into September we expect market participation to pick-up towards a fuller, more ‘normal’ market environment.
Taking a look at the short-term, yesterday’s wobbly price action put the DAX on a trend-line running back over a month. Hold the line, then the market continues to remain postured for higher prices. The first area of resistance comes in at 10780/806.
If the DAX breaks the trend-line, then we will have to consider the idea we may be seeing a double-top forming from the mid-August peak, or at the very least a move lower in the short-run. The first level of support on a break comes in around the 10450/500 area.
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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.