DAX Short-term Trading Outlook: Gap Lower Finds Early Buying
- DAX gapped lower on US political/Trump concerns
- Working on taking back the gap
- Short-term support and resistance levels outlined
We’ve been looking at the daily landscape, today we’ll take a close-up look (hourly time-frame). A decent-sized gap higher occurred to start the week, an even bigger gap lower to start today; in both instances the DAX found opposition – sellers on Monday, buyers today. Not an uncommon occurrence to see these minor gaps fill in relatively short-order from one trading session to another, or at least an attempt early on in the session (like we are seeing right now).
In yesterday’s webinar, we looked at a rising wedge developing on the 1-hr chart; the feeling on this end was that given its relatively flat angling it didn’t hold quite the bearish implications it would if it were to have been a bit steeper. Rising wedges after extended runs often break lower, catching the market (longs) leaning the wrong way. In any event, we saw a break this morning on U.S. political instability/Trump concerns. The gap-down also put the DAX below a steady trend-line back to the 4/24 French election gap-day open.
At the time of this writing, the market has taken back most of the ~100-point gap, and is also trying to recapture that broken trend-line. Looking for points of resistance: On a sustained rally, first up is the gap-fill and the under-side of the broken wedge, followed by the record high at 12842.
Should we see the market fail to push beyond the gap and roll over we will look back towards the session low at 12700 first. A break below the intra-day low brings the 12660 area into play.
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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.