DAX: Steadfast Slope Resistance Keeps a Lid on the Upside
- The DAX is declining off the top-side parallel
- Bias remains lower beneath this line, turns more positive on a climb above
- Keep an eye on the S&P 500 as it sits at a critical crossroad
The DAX is kicking off the week on a modestly weak note at the time of this writing, down about 0.70%. Over the weekend, China released weak export data for September, helping stir up global growth fears.
Whatever the case, the DAX is continuing to respect resistance in the form of an upper parallel going back to the early part of September. Looking to the top-side parallel as a guide; stay below and no reason to expect prices to move higher, trade soundly above and recapture the post-Brexit trend-line, then the picture begins to turn more positive.
Sounds simple, right? The bias based on this understanding of the current technical structure is, but choppy trading conditions continue to make things difficult from a tactical standpoint. Traders looking to establish a short can use the downward sloping resistance as a backstop, while those looking for higher prices will likely be best served waiting for the steadfast line of resistance be breached, first, before jumping aboard the bull-train. In either event, our expectations for outsized trades remains tempered.
Continue to keep an eye on the US market as the S&P 500 flirts with a significant support zone. We’ve discussed this on a number of occasions recently, and will continue to focus on it given the pivotal spot the market is at.
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---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.