DAX 30 Technical Outlook – Upside Not Without its Obstacles
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DAX 30 Technical Highlights
- DAX has confluence of trend-lines as resistance
- Global appetite for stocks supportive
- 12100 may again be important on weakness
DAX has confluence of trend-lines as resistance
Last week when we last looked at the DAX it was working on breaking through resistance around the 12100 mark, but now faces perhaps an even bigger challenge. The trend-lines running up from the Feb 2016 low (end of last major correction) and off the June high are in confluence, presenting a problematic hurdle to overcome.
So far, we aren’t seeing a sharp decline off Friday’s touch of resistance, but should momentum pick up it could end up as more than just a pullback, and yet another leg lower in the sequence of lower lows and lower highs since the summer.
However, global trends remain supportive for stocks, with the world’s largest stock market (U.S.) hanging out in record territory, the Nikkei having posted strong gains the past couple of weeks, and even the FTSE, which had been so weak, is showing a fair amount of life. This general theme of strength has recently spread to Euro-zone stock, too, and could keep the DAX buoyed or better.
The trend-line running down off the July high was breached on Friday and is up first as support, but the more important area to hold is around 12100. This is still viewed as a significant area of interest for the market and could offer a solid line-in-the-sand upon another test.
For market sentiment and to learn more about how to use it in your analysis, check out the IG Client Sentiment page.
DAX Daily Chart (Feb ’16, June t-lines)
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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.