What’s inside:
- The DAX continues to add to recent losses
- Broke uptrend line, now trying to hold onto September lows
- Confluence of sloping support at ~10200 eyed on further weakness
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Yesterday, when we looked at the DAX it was pointed out at the time that the index was sitting on a fairly important level of support beneath 10500, and that if that area broke the next line of defense for buyers was the trend-line running up off the post-Brexit lows.
The DAX is at it again today, adding to yesterday’s losses. Currently the index sits below the trend-line, attempting to hold onto the September low at 10262. A clean daily close below trend and horizontal support will further tilt the chart towards more selling.
However, the DAX does have another round of not-so-obvious support levels not too far away which may act as an area from which a bounce, at the least, could develop. The lower parallel of the month-long developing channel arrives almost at the same point as the backside of the trend-line running off the 2015 highs. This confluence of sloping support makes it an important area; roughly 10200, but declining with time and the slope of the lines.
DAX Daily
Created using Tradingview
For now, with support levels not yet fully tested and rejected it’s tough to be a buyer, but it is also difficult to be a seller with the market probing support. Should we see a weak bounce from around current levels and failure to recapture the trend-line, then short-term shorts may become attractive for another thrust into the 10200 area. Conversely, a continued drop into the intersection of support around 10200 could offer up ‘would-be’ buyers a spot from which to initiate a long position if the DAX can show signs of life upon meeting support.
---Written by Paul Robinson, Market Analyst
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