What’s inside:
- The DAX is supported by price and global sentiment
- The CAC 40 is weaker, but generally constructive
- Support and resistance levels outlined
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The DAX continues to bounce from support surrounding the 10500 mark, but is that all it is or is the current up-move the beginning of a new leg higher? Global risk appetite, especially in the U.S. where stocks are at record highs, continues to be fairly healthy. Japan has seen a nice surge of buying in the past couple of sessions, with the Nikkei 225 on the verge of trading above its Jan high.
Giving the benefit of the doubt to risk appetite and the general trend since late last year, the DAX looks poised to at the least continue to hold its bid. The big area of support comes in from around 10500 down to 10400. As long as that zone holds then there is reason to be constructive on the German index. Significant resistance is absent until we see trade back up to the Jan high of 11893 and into swing highs carved out during the descent from record highs in 2015. At this time, the DAX looks as though it will try and make a move to new highs at some point.
DAX: Daily
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The CAC 40 made a solid push higher in recent sessions as well, testing the trend-line off the Jan 13 high. It has a series of lower highs and lower lows in place since early-on in January, but the overall price action so far doesn’t resemble that of a new downtrend so much as it appears to be a correction of the late-2016 rally. A pullback may take shape off the trend-line, but as long as any pullback can halt and create a higher low from the Feb 8 swing low, then the CAC 40 could be on its way to making a push towards the Jan high or better.
CAC 40: Daily
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---Written by Paul Robinson, Market Analyst
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