We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Real Time News
  • RT @GlobalTimesBiz: After more than two weeks of #China’s efforts to resume business activities, only 30 percent of migrant workers has ret…
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @JohnKicklighter here:https://t.co/1oeXWEsJkb https://t.co/c5YVgs5YKD
  • While Sino-US trade jitters are temporarily abating, China-Swedish trade tensions are rising as a part of a political contagion of growing economic hostilities between nations across the world. Get your market update from @ZabelinDimitri here:https://t.co/F1fVoyzoz5 https://t.co/z49NzgZrXd
  • RT @malkudsi: Natural Gas Eyes Pushing Higher as Support Holds - Nat Gas Technical Analysis More details in the link below: https://t.co/HG…
  • As prices dance around on charts, traders are often looking for reasons to explain price movements; however, the underlying source of price movement boils down to the relationship between supply and demand. Learn more about the forces of S&D on forex here: https://t.co/8LfkLXbj2W https://t.co/swcuwAMGAk
  • How can traders avoid #FOMO in trading? Start by implementing a well-heeled plan taking only four hours per week. Get your insight from @JStanleyFX here: https://t.co/vwUShQPc27 #tradingstyle https://t.co/4adyTWvQ22
  • What are the Market cycles? How are #currencies impacted in these cycles? How can these cycles impact #forextrading patterns? Find out here: https://t.co/ckr2fUOWqW https://t.co/gLJGj1FAOC
  • Central bank independence has several advantages and disadvantages. Find out what they are in-depth with @MartinSEssex here: https://t.co/wVFXbbTxf1 https://t.co/J0MMkVmCUu
  • Get your stock market basics right - what is the stock market and how does stock trading work? Find out here: https://t.co/JfAJLAtlsY https://t.co/ZfPUxHWeiG
  • The Mexican economy contracted for the first time in almost 10 years in 2019, but growth is expected to pick up in 2020 according to its finance minister. Get your $USDMXN market update from @HathornSabin here: https://t.co/gupJdU7WYT https://t.co/mMN8LFb5i5
DAX & CAC Technical Outlook: Keeping the Euro in Mind

DAX & CAC Technical Outlook: Keeping the Euro in Mind

2018-05-15 09:15:00
Paul Robinson, Currency Strategist
Share:

DAX/CAC Technical Highlights:

  • Euro weakness a boon amidst firming global risk appetite
  • DAX clears above resistance zone, has trend-line support too
  • CAC at fresh decade+ closing highs

Check out the DailyFX Q2 Forecasts for the DAX, Euro, and other major markets; also see how our Trading Opportunities for are 2018 are performing – DailyFX Trading Guides.

Euro weakness a boon amidst firming global risk appetite

Since March, we’ve seen euro weakness help provide a strong tailwind for Euro-zone equities as general global risk appetite firmed up. The one-month correlation between EURUSD and the DAX and CAC, respectively, is -82% and -95%. Both figures have strong statistical significance, especially the latter which indicates the French benchmark and single-currency are trading nearly 1-to-1 in opposite directions.

While we don’t typically focus so much on currency/index correlations in our analysis for determining direction in the specific indices, it’s worth noting when it becomes this prevalent for a couple of reasons.

One, if there is strong conviction in what the currency may be on the verge of doing, then one can make deductions when analyzing the index (or even vice versa). (There is reason to believe the euro is headed lower once oversold conditions are worked off.) However, it’s worth heeding caution when doing this, as correlations have a tendency to change without warning.

The second, and on this end the most important reason to understand these relationships for short-term trading, is for risk management purposes. If you are trading highly correlated markets (or inversely correlated, in this case), then it is prudent to understand how your positions can interact with one another.

For example, in regards to Euro-zone indices and the euro, holding positions in opposite directions at this time is in essence the same as holding one larger directional trade. As said before, the relationship can of course change without notice, but it’s better to play it safe and respect the correlation.

On the other hand, if holding positions in the same direction, then one could be more relaxed about splitting the size up on the two trades; but, again, keep in mind that the relationship can change.

See this guide for 4 ideas on how to Build Confidence in Trading.

DAX clears above resistance zone, has trend-line support too

The DAX recently broke above the 12850/950 zone, which has this area now a potential source of support, along with the trend-line rising up from the March low. The market is extended, but could be amidst a period of consolidation. A move into the trend-line while sitting in the support zone could provide a decent spot to look for fresh long positions.

A decline below both forms of support would be reason to back off from this notion. If the broader topping formation we recently discussed is to come to fruition, then we’ll need to see a breakdown of support happen relatively soon. For now, we’ll respect the current climb higher and support below.

DAX Daily Chart

DAX daily chart

CAC at fresh decade+ closing highs

The CAC, as noted earlier, is benefiting the most from a weak euro. The index has erased all of its losses experienced from earlier in the year and recently closed at its best levels since 2007.

There is a trend-line from over 10 years ago that it is currently trading at, but given the distance between the first and second point to the recent touch, it’s questionable from a symmetry standpoint how much impact the trend-line will have.

A breakout above 5567 will have the CAC trading at its highest level since 2007 on an intra-day basis, as well. Price action has become sluggish lately, so momentum might be running low on the extended index. Overall, while the trend remains firmly higher, risk/reward for fresh longs isn’t favorable at this time. Shorts still hold risk until we see a firm rejection.

CAC Daily Chart

CAC daily chart

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.