DAX Short-term Trading Outlook
- DAX stalls, looks headed lower near-term on break of support
- Decline still healthy unless we see aggressive downside price action, bias will change then
- Technical levels outlined
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The title of Wednesday’s post was, “DAX Gearing Up for New Highs”. Not so fast. The market since that morning has been ‘soft-ish’, but nothing to get overly concerned with just yet. The short-term chart (hourly) suggests more downside could come if the market can’t soon bounce, but there is trend-line support not far below on the daily should sellers arrive.
A head-and-shoulder-ish pattern, or possibly a descending wedge could come into play real soon. The H&S formation has a weak right shoulder; the symmetry isn’t the best but still qualifies in our book as a valid formation. A clean break below 11725 exposes the downside regardless of what you want to call the configuration – H&S, wedge, or any other name you want to give it. We will look to the trend-line rising up from December and gap-fill from 2/13 at 11665 as the next levels of support on a break. However, if support holds and we see a pop higher, then bearish bets are off and we'll have to start looking upward.
An aggressive break lower and undercut of the trend-line extending back to early December would be of concern for wagers from the long-side looking out beyond the very short-term. For now, though, global risk appetite continues to remain buoyed, and until we see aggressive price action lower we will run with the notion of weakness being nothing more than a healthy pullback for what could later be the DAX gearing up for new highs.
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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.