DAX Technical Highlights:
- DAX cleared through 12550/600 resistance
- Challenging 200-day MA; gaps, t-line ahead
- Bullishness should prevail in the short-term
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On Tuesday, the DAX cleared through the zone of resistance in the 12550/600 area, furthering the breakout in yesterday’s trade. This has the 200-day and gap-fills in focus. There are two gaps which could soon come into play; one at 12834 from 6/18 and the other at 13010 from 6/15.
The second gap resides roughly around the trend-line off the record high. This trend-line has a fair amount of significance given it has two key connecting points from May and then June. A rally to that point would likely face opposition and be a good spot to look for stalling momentum.
Looking lower on a dip, the ‘old resistance becomes new support’ rule applies here. Any dip down into the 12600/550 region and hold will be viewed as a potential backstop for would-be longs. A break through and we would need to readjust and perhaps downgrade the importance of this price band dating back to February.
Broadly speaking, the potential for a ‘head-and-shoulders’ top dating back to June of last year is still intact. However, if the DAX starts to really grow legs and run past the trend-line and then above the May high, this scenario would be in serious jeopardy as symmetry of the pattern would be considerably dented. We’ll discuss this big-picture scenario at a later time should it become relevant.
For now, focus is on recently secured support and obstacles which lie ahead. It looks like the DAX wants to ride a bit higher for now, then perhaps roll over once the summer rally has run its course.
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DAX Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX