DAX Tech Update: Short-term Trading Levels Amidst the Chop
- Top-side parallel overcome, but other resistance stands in the way
- Trading conditions remain choppy, leaving trading best for those with short-term holding periods
- Techs on the 2-hr chart examined
On Monday, we discussed slope resistance running off the 9/8 swing high. Yesterday, the DAX managed to close above it for the first time since it came into play, but hasn’t yet recaptured the trend-line off the June lows. Resistance in the 10640/700 vicinity also stands in the way of the market continuing the recent advance.
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Overall market direction is lacking, which means trading at this time is best left to those willing to operate off time-frames of only a few hours to a couple of days.
Dialing in on the 2-hour chart: A pair of trend-lines is extending lower. The first trend-line, which is immediately having influence on the DAX, comes in off the 9/22 high. The second trend-line, ~20 points above the first, goes back to the 8/15 swing high. There are also a couple of small swing highs in the current area from early in the month.
Immediate resistance presents the first hurdle for the market to overcome if it is to move higher, and until it does we will not view the market through a bullish lens. It doesn’t mean we are aggressively bearish, but we know all too well that buying into resistance (just as shorting into support) is generally a losing endeavor.
A move lower will bring in the trend-line off the big Deutsche Bank-induced gap-down day low on Sep 30. We will use that as initial support should it trade down there.
The convergence of trend-lines discussed brings to light the possibility of a wedge pattern reaching maturity with a little more time spent bouncing around between the upper and lower trend-lines. This would be a welcomed event given the nature of such patterns often times leading to sustained moves – one way or another.
For now, we will continue to keep expectations of large price swings tempered and utilize the current short-term landscape to shape our trading bias.
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---Written by Paul Robinson, Market Analyst
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