DAX - 12700 Important to Near-term Outlook
- DAX gaps lower to begin its week, watching 12700 as our ‘line-in-the-sand'
- Push to new highs will bring Feb top-side t-line into focus as resistance
- ECB on Thursday, Draghi and crew could spark volatility
Find out what’s driving global equities in our market forecasts.
The DAX is starting off a holiday-shortened week with a minor gap lower following Friday’s rip to a new record high. Looking out over the near-term, as long as the market doesn’t fully reverse Friday’s rally and drop below 12700 there isn’t cause for alarm from the long-side. Looking higher, we’ll look to Friday’s high at 12878 as the first level of resistance, then the top-side trend-line extending higher since February; a line which has held clear influence since then.
If the DAX fails to get into gear and trades down below 12700, then the market may be in for some problems. At that juncture, we would be looking at a rejection to maintain new highs and possible double-top, or at the least a drop back to the trend-line off the December swing-low and May bottoms surrounding 12500.
Overall, while trading hasn’t been the cleanest the past month we continue to respect generally bullish global risk trends and run with the notion the DAX will, albeit in perhaps choppy fashion, carve out higher levels. With that said, though, how the market handles the Feb top-side t-line will be important should we soon see it trade up to that point.
Volatility heads up: ECB on Thursday. The market isn’t looking for any changes at this meeting, but look for Draghi and crew to shed light on their intentions with monetary policy as we move towards the second half of the year.
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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.