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DAX Chart Analysis – Bounce Could Be Near, but Damage Significant

DAX Chart Analysis – Bounce Could Be Near, but Damage Significant

Paul Robinson,
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DAX Highlights:

  • DAX decline continues, could be due for a bounce soon
  • But important technical levels and lines have already been broken
  • A bounce may prove to struggle to gain much momentum before sellers show back up

For longer-term fundamental and technical analysis on the DAX & Euro, and our top trade ideas for 2018, check out the DailyFX Trading Guides page.

DAX short-term oversold, but technical damage signficant

The fall from the record high as been fierce, with only marginal bounces at best alleviating the selling pressure. Our focus recently shifted towards important support as the next likely spot for the DAX to sell off to, but those levels have failed.

All in them in aligned in the same vicinity – the trend-line from June 2016, the Jan 2 low, and the 200-day MA. Today’s gap, while there could still be a turnaround, has the DAX clearly trading below the trio of levels. Given the importance of this confluence, if the DAX doesn’t turnaround and close above them today, we’ll have an official daily closing break.

Given the straight-line sell-off, the DAX may find some short-term relief, but given the proximity of the aforementioned levels, it only has about 100-200 points from current levels (12750/12860) before sellers could show up again (old support, new resistance).

Looking to the left on the chart, there are minor levels (including one around the current price at 12676), but nothing truly meaningful until ~12300, where last summer the market traded around this level as support and then resistance for a couple of months. Below there, the late-August swing-low at 11868 comes into play.

For now, we’ll stick with a downward bias and look to failed attempts to rally as potential opportunities for ‘would-be’ sellers to join in on the decline.

Check out this guide for ideas on Building Confidence in Trading

DAX Daily Chart

DAX daily chart, below support

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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.