DAX Technical Outlook Skewed Lower, Big Area of Support in Focus
- DAX broke ascending wedge to the downside, below support zone market becomes dicey
- Work needed on the top-side to at least turn picture neutral
- Technical levels and trading considerations
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The other day when we last looked at the DAX it was turning higher from near the bottom of an ascending wedge it failed to break higher from back on 6/20. But then Tuesday happened. It wasn’t a good look for the index, as failures to break higher from wedges and subsequent declines through the other side of the pattern can lead to nasty moves. So far, we aren’t seeing a ‘nasty’ move, but the market posturing has certainly weakened.
Yesterday, the gap lower was quickly bought and the market kept afloat through to the end of the session. This morning we are seeing a gap and test of the December trend-line broken on Tuesday. A recapture of this trend-line and firm push back towards 12800 will need to soon develop if the market is to turn from bearishly positioned to at least neutral.
The first level on the downside to keep an eye on is of course yesterday’s low at 12537. Support really extended down to around 12486. There is about a 50-point zone of support which needs to hold before the gap from the first round of the French elections comes into play. Looking higher, as stated before, some work will need to be done; first getting back above the December trend-line and back towards 12800 before the picture neutralizes.
Overall, it’s still a fairly choppy market to trade and with that we need to be extra mindful about how we enter trades in these type of trading conditions. It’s especially important to wait for entries on retracements in order to get ‘best pricing’.
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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.