- DAX holding onto to support after last week’s reversal-day
- But has long-term trend-lines in current vicinity and just a shade higher
- Longer it takes to trade higher the more risk of another decline grows
On Wednesday, the DAX broke down below important support in the low-12900s, but managed to recover by the close of the session to put in a modest reversal-day. This helped keep a bid in the market, but it’s a sticky area with key support in place by way of the consolidation period during October and prior high in June and resistance at the long-term top-side trend-lines crossing over in the current vicinity and just above. A lot going on in a tight window.
The key to keeping a floor in the market at this juncture is last week’s low at 12847. A close below and another leg lower will have eyes on the July swing-high at 12676, and then an important long-term trend-line dating back to the June low from last year. Also in that same vicinity is the 200-day MA.
The longer it takes for the market to lift risk increases with each passing day that we are seeing a pause before a break towards the aforementioned levels. If the DAX can convincingly gain traction, there aren’t any substantial levels to contend with until the prior record high at 13525. But this doesn’t mean it will be easy getting back to those levels. The recent pullback was strong, it may take some time for market confidence to rebuild again if we are to see a serious attempt on making new record highs.
On Thursday, both the U.S. and Japan will be closed for trade, making this a ‘holiday week’. At the least expect market interest to wane on Thursday and Friday.
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---Written by Paul Robinson, Market Analyst
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