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DAX Short-term Trading Outlook: More Weakness Ahead

DAX Short-term Trading Outlook: More Weakness Ahead

2017-04-20 08:29:00
Paul Robinson, Currency Strategist
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What’s inside:

  • DAX breaks lower Feb parallel and 12050
  • Hourly chart sporting a downward channel which we will use as a guide
  • Short-term trading levels and lines of interest

Is this just a healthy pullback for the DAX, or could a larger decline be developing? See the Q2 forecast to find out what DailyFX analysts have to say.

On Tuesday, we discussed the importance of closing below the lower parallel running back to the early-Feb low and 12050 for shorts to gain traction. The close on Tuesday was below noted levels and came right at the 3/28 gap-fill. Yesterday was a nothing day, with one of the tighter intra-day ranges we’ve seen in while, and this morning we saw a smallish gap lower and fill to start the day. We’re lacking any real snapback at this time, which favors more downside.

DAX: Daily

DAX Short-term Trading Outlook: More Weakness Ahead

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Should the market get a little pep in its step, we’re looking to 12050 as resistance, and then the underside of the broken channel, which at this time comes in at over 12100. On the hourly chart the DAX is running lower in a descending channel, which we will use as a short-term guide; stay below the upper parallel and a bearish bias remains intact, while a jump above will warrant consideration for alternative paths. The lower parallel may act as minor support with further selling, but the next significant swing point comes in at 11850, with 11916 as a possible stopping point along the way. Below 11850, we look for 11722 to come into play.

All-in-all, the game-plan is to continue to focus on short-term entries from the short-side, but should the DAX violate the current bearish posturing we will be quick to change gears.

Hourly

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Created with TradingView

Come check out the commodities and equity indices webinar every Tuesday with Paul for up to date analysis on the DAX. See the Webinar Calendar details.

---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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