DAX Technical Analysis: Bottom of Range Back in View
- DAX back inside prior range, points to possible test of low-end
- Support clocks in around 12940 down to 12810
- Thin trading conditions to persist into next week, prudent to take it slow
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Last week, when we were discussing the DAX, the index had finally broken out of a month-long trading range. The breakout, if it held, suggested we might see a solid push back towards and maybe even beyond the prior record high set in November. But that notion was quickly put to rest as the German benchmark cleanly fell back inside the range in less than two days.
The first target on a failed range breakout was the 12/18 gap (which has been filled) with the possibility then of seeing a move towards the low-end of the November/December range in the vicinity of 12940/810. In the event the DAX can hold up here sooner it could make its way back higher, but the fact the range breakout was negated so quickly suggests we may see more weakness first.
It’s thin holiday-trading conditions in financial markets, and will be the case for the remainder of the week. Markets will be closed on Monday for the New Year, so Friday is likely to see volume dry up again as it did last week heading into the long holiday weekend. It’ll be prudent for traders to take it slow until better market participation returns. January often times brings good price movement, which is the positive as the year quickly draws to a close.
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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.