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DAX Technical Outlook: Looking to Find its Footing Ahead of ECB

DAX Technical Outlook: Looking to Find its Footing Ahead of ECB

What's on this page

DAX Technical Highlights:

  • Strong back-and-forth gap reversals first two days of the week
  • Market may have found a low for now if Monday’s gap-reversal holds
  • Tactical considerations outlined; event risk tomorrow via ECB meeting

To see our analysts’ Top Trading Opportunities for 2018, check out the DailyFX Trading Guides page.

Monday gap-reversal may have marked near-term low

On Monday, the DAX gapped just below the support zone of 11935/868, but quickly found a large number of buyers to keep it buoyed. The gap-and-reverse held enough power to think perhaps a short-term wash-out may have occurred.

A major factor which may prove helpful for global stocks. The world’s largest stock market, the U.S., may be amidst a stabilization process as it works its way back higher (although today this notion might be put to the test on last night’s White House news, S&P 500 futures currently -25).

A jab lower and successful test of Monday’s powerful gap could offer aggressive would-be longs a chance to jump on a retest-style entry. On a break below 11831, though, another round of selling is to be expected.

For those looking to short a rally, the first level of resistance comes in at a trend-line coming down off the record high running over top the bear-flag prior to last week’s swoon. A turn down from there or on a bit more strength a turn in momentum prior to reaching 12601 (carving out a lower-high) could offer good risk/reward entries.

DAX Daily Chart

dax daily price chart

ECB on Thursday

Event risk this week comes by way of tomorrow's ECB meeting, which may bring a bout of volatility on signaling over concerns of euro strength. If the single-currency is impacted with force look for similarly forceful price action out of Euro-zone indices. You can join analyst, Martin Essex, for live coverage of the ECB announcement tomorrow at 12:30 GMT time.

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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.