DAX Technical Highlights:
- DAX rallying into resistance zone
- Lower-high or rally gain legs, soon find out
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The recent decline found buyers around 12600, an area which was previously resistance in April. The move thus far hasn’t been the most powerful, and begs the question as to whether the market is trying to get its legs under it or is simply in a corrective move that could turn into a deeper decline off last month’s high.
Resistance surrounding 12900 could at the least prove problematic in either case, so how a turn down from there, should one develop, will be watched keenly for further indications. A turn down will have a trend-line off the March low quickly in focus, but it’s not yet viewed as the most steadfast line at this time.
A push through the 12900-area will have a minor gap-day reversal high at 13041 in focus, followed by the trend-line of the record high, then trailed up by 13204. It seems the market will need some help to rally to and through that final level: via strong global risk appetite and/or euro weakness to again act as a boon for Eurozone equity markets.
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DAX Daily Chart (Turn down again soon?)
Tactically, for those looking to short, the area just ahead could offer a good backstop for assessing stops while looking for another leg lower to develop. On the flip-side, longs need to focus on the recent lows and to a lesser degree the trend-line extending higher since March.
Overall, the picture isn’t the cleanest at the moment, and conviction isn’t the highest from either side of the tape. We saw a big move out of European indices during April/May, extended slides out of currencies tied to those indices – we are in a bit of an ‘in-between’ period at the moment.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX