DAX: Pullback Looks Constructive, Watch Support Not Far Below
- DAX gaps to near record high last week, pulls back
- Price action past few sessions suggests higher prices
- Support lines below hold, so does a bullish bias
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Last Monday, the DAX gapped higher to just below record highs created in 2015 at 12391; the market fell shy by about 16 points. That gap led to an immediate intra-day reversal and subsequent weakness for the remainder of the week.
Thursday and Friday both brought gap-down days with reversals back into or very near positive territory, which is short-term bullish and may mark the bottom of the recent decline. In the event of more selling and a move back towards last week’s low of 12119, the DAX will also challenge the trend-line off the December low. A break below that line and 12119 wouldn’t yet turn the picture bearish, as another line of support aligns not far below by way of the lower parallel running higher from the early-February swing-low. It would require a break below all three levels of support before we would consider the possibility of a deeper decline developing.
On the top-side, in the very short-term 12290-ish could act as resistance, but the real focus is on last Monday’s high of 12376 and the record high at 12391. A push beyond the previous highs would be bullish, but only to a modest extent. The trend-line running higher from August passing through near last weeks’ gap high may be problematic, in addition to the upper parallel married to the early-Feb trend-line.
For now, we hold a bullish bias on a hold of support close at hand, but will reserve excitement even if the market crosses into new record territory.
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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.