DAX Technical Outlook Turns Positive on Range Breakout
- DAX finally breaks out of volatile month-long trading range
- Stay above the range and focus is on the record high at 13525 and higher
- A decline back inside the range puts a pause on bullish outlook
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Yesterday, the DAX finally broke free from the volatile trading range it had been shackled by for the past month. The outlook until then had been stuck in neutral. The strong showing to start the week has the record high at 13525 in sight. With general global risk appetite healthy a breakout to a new record high may take shape as 2017 concludes.
On a break above 13525 the next targeted area of resistance doesn’t arrive until near 13900. Up there lies a slope running over from the 2007 high across the 2015 peak. The slope runs parallel to a trend-line extending higher off the 2009 low which connects with the big low in 2011. The importance of the trend-line adds importance to its parallel. It would take an aggressive move to reach that point by year-end, but not totally out of reason.
To undermine the breakout, we would need to see a decline back inside the range below 13200. A drop back inside the range would also expose the likelihood of seeing yesterday’s gap get filled down to 13103 for starters, and if sellers get aggressive a move could even develop back towards the bottom of the range towards 12800.
At this juncture, global markets are poised to carve out generally higher levels for the remainder of the year, or at least maintain a bid. On that note, until price action suggests otherwise a generally constructive outlook is warranted for most major markets. Also keep an eye an eye on 5442 in the CAC, as a jump over this hurdle opens up a path to the November high at 5536 and will help bolster the case for a stronger DAX.
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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.