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DAX & CAC Charts: Bearish Price Sequences Looking to Pick up Momentum

DAX & CAC Charts: Bearish Price Sequences Looking to Pick up Momentum

2018-03-20 08:03:00
Paul Robinson, Strategist

DAX/CAC Technical Highlights:

  • DAX looking to trade down from lower-high
  • CAC finding lots of trouble around 5300, wedge forming
  • Keep an eye on U.S. markets (S&P 500, Dow Jones, etc.)

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

DAX looking to trade down from lower-high

The outlook for the DAX is still much along the lines as it was last week, with the strengthening possibility, though, that a lower-high from the high of a bounce in February has been etched out. The lower-high, if having been set in place already at 12460, arrives at the upper parallel of a developing downward channel that has enveloped price action the past six weeks.

The price sequence keeps the general outlook tilted lower for as long as the German benchmark can’t maintain trade above 12460, and even then, a move above the swing-high created in Feb at 12601 is needed to turn the picture, not bullish, but a little more constructive.

If bearish price action is to become a dominant theme again (yesterday may have been the beginning of another round of selling), then near-term support levels should soon start coming under fire. Looking lower, the first level of support clocks in at 12161, then 12020, followed by the gap-down low at 11831 from earlier in the month.

For ideas on how to build or restore confidence, check out Building Confidence in Trading

DAX Daily Chart (Bearish channel developing)

dax dail;y price chart with bearish channel

CAC finding lots of trouble around 5300, wedge forming

The CAC is struggling mightily to cross above 5300, and why shouldn’t it with a confluence of resistance running through the area by way of price, 200-day, and trend-line. Taking a trend-line off the Feb low, a wedge is beginning to take shape above the June 2016 trend-line.

Given this price sequence is developing after a strong drop off the high in January, the wedge looks most likely to be of the continuation variety. The biggest level of support to watch is the June trend-line, a break below should open up a path to break the pair of swing-lows from last month.

CAC Daily Chart (~5300 Resistance, Wedge forming)

cac daily price chart with wedge forming below ~5300 resistance

Keep an eye on U.S. markets (S&P 500, Dow Jones, etc.)

As the largest stock market in the world, how U.S. indices (S&P 500, Dow Jones, Nasdaq 100, etc.) perform will obviously have a large impact on the rest of the globe. There has been mixed signaling as to whether a larger top has been forming or the abrupt correction is over.

As noted last week, we recently began turning to a wedge forming in the Dow Jones as a signpost. The index broke lower out of the pattern yesterday, and if momentum starts to gather pace then look for other global indices to do similar.

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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.