DAX: Volatile Price Action at Support Suggests End of Pullback
- DAX thoroughly tests trend support and holds
- As long as yesterday’s low holds we look for higher prices
- Important support and resistance lines outlined.
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Yesterday was a volatile session, with the DAX trading with relative calm until the U.S. markets entered the picture during the afternoon. European indices dove sharply with the S&P 500, but then mounted a strong recovery in the last half-hour of trading. The late-day bounce came from the Feb 8 lower parallel we looked at in Monday’s commentary. The bounce also put the DAX back just above the December trend-line on a closing basis. The volatile price action at support (forming what some call a ‘long-legged doji’) was a good test of key trend support, further cementing the importance of the lines we have penciled in.
If the market is to continue to move higher yesterday should mark a swing-low; a higher low when looking back the past few months. Looking skyward, in the very near-term 12247 (4/10 high) and 12293 (4/5 high) may act as minor resistance, but if the market is to continue the broader trend higher we shouldn’t see too much push back until at least the 4/3 peak at 12375 and the record high just a few points higher at 12391.
A break below the lower parallel and a lower low below 12050 would prove to be an important event, and likely mean yesterday's turn-around and today’s modest strength is nothing more than a bounce from support and not a meaningful low.
For now, we will trust support until broken and run with the notion of seeing higher prices as long as yesterday’s low holds.
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Looking for a longer-term outlook for the DAX? Check out our Q2 Forecast.
---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.