DAX Technical Outlook: Attempt to Stabillize Continues
- DAX attempting to make good on Thursday reversal, clear 12660
- A clearance on a daily closing basis brings into play the underside of key trend-line, record highs
- Failure could mean another leg lower towards last week’s low and other notable support levels
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The DAX is doing its best to stabilize after getting knocked off balance last week on headlines out of Washington. The price action since Thursday’s reversal day has been on the sluggish side, with the area around 12660 having been an issue the past couple of days. If we are to see higher prices, climbing convincingly above is the first step. Perhaps today we will see just that.
If we can see a solid day closing daily bar above 12660 then the next objective will be the underside of the trend-line running over peaks from July-April and then under recent price action before the Trump news hit the wires. Given the angle of the trend-line, trade up to that point will bring the DAX very near the record highs recently notched out at 12842.
Another rejection though to make good on Thursday’s reversal and close below 12660 could set the market up for another push lower. The first targeted level is Thursday’s low at 12490, then prior peaks in the vicinity of 12375/90. Below there we would turn to the trend-line running up from the December low.
For now, price action in either direction isn’t fully convincing from where we sit. Risk/reward isn’t particularly favorable with clarity lacking.
Heads up: Tomorrow at 18:00 GMT, the FOMC will release its minutes from the earlier-month meeting. Last month it sparked a sizable sell-off in the U.S. which in return caused a gap-down the following day. We may see nothing substantial this time around, but traders should be prepared.
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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.