DAX Tech Update: Confluence of Slope Support Not Far Below
- 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.
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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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.