DAX Technical Update: Walking the Line
- The DAX is testing trend-line support from the June lows
- Resistance remains clear around the 10800 mark, support below recent lows not so clear
- In wait-and-see mode as market bobbles between support and resistance
As the day gets underway the DAX is ‘walking the line’, the trend-line dating back to ‘Brexit’. This comes after pulling off from staunch resistance surrounding the 10800 level. The trend-line isn’t the most important level of support, but if the market is to push on through to yearly highs it would be a good start for the market to hold here, or at the least not close below the 11/10 low at 10576. A close below support levels puts momentum in favor of shorts.
Resistance is easily identifiable as the market declines from the vicinity of 10800 for a fourth time. However, finding support levels, due to the enormous gap-n-rip following US election results, is not so easy should the DAX fail to hold the trend-line and recent daily lows. There isn’t substantial support until the trend-line rising up from June under the 10/10 low. At this time that is quite a bit lower.
For now, as long as the market holds between short-term support in the 10610/576 region and resistance surrounding the 10800-level, trading will be choppy. Market conditions best left to quick-flipping day-traders. Price action wedging itself between rising support and horizontal resistance would be a welcomed development as pent up pressure would likely lead to a decent amount of momentum upon a breakout. But we will first need to be patient in waiting for this scenario to play itself out.
Traders with short-term hold times can use support and resistance as points of reference for shaping trades. In tomorrow's webinar at 10 GMT we'll talk in detail about how to handle current market conditions in the indices, as well as in the FX and commodity markets.
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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.