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DAX Technical Update – Upward Grind Brings Resistance into Focus

DAX Technical Update – Upward Grind Brings Resistance into Focus

Paul Robinson,
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DAX Technical Highlights:

  • Channel off the June low keeping DAX pointed higher
  • Trend-line running off record high not far ahead
  • Seasonality turns negative for global markets

For the intermediate-term fundamental and technical outlook for the DAX & Euro, check out the DailyFX Q3 Forecasts.

Channel off the June low keeping DAX pointed higher

Not a lot has changed since discussing the DAX last week. The channel off the June low continues to act as our guide, and as long as price stays contained within it, then a neutral to upward bias remains intact. There is resistance via the trend-line off the record high just ahead, which if met, may be problematic.

If we see a rejection at resistance unfold and subsequent break of the lower parallel, then focus will quickly shift towards neutral to bearish. The same could be said if the channel were to break without seeing the January trend-line, but ideally for strengthening a short bias resistance is first tested.

It’s been a decent little summer rally for the DAX, but seasonality is turning against global stock markets. There has been a good deal of discussion in the media about seasonal headwinds the market faces the next couple of months, as is the case every year, but given the earlier year woes and where we are in the current cycle, it may be more important this year.

Whether we get a major swoon or minor weakness is yet of course to be seen, but should we start to see momentum come in on the downside in a big way in the weeks ahead we’ll be prepared to take advantage of a rising volatility environment. Keep in mind, though, August can also be a real snooze-fest as lots of traders leave their desk to squeeze in a summer vacation before time runs out.

Check out this guide to learn 4 core tenets for Building Confidence in Trading.

DAX Daily Chart (Channel remains the guide)

DAX daily chart, channel remains the guide

For live weekly updates on the DAX and other indices, join me live on Tuesdays for ‘Indices and Commodities for the Active Trader’.

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---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.