DAX 30 Technical Outlook – Turn from Resistance Has Support Back in Focus
DAX 30 Technical Highlights:
- DAX turn lower from resistance brings support to light
- ~12100 is a reaction level to watch this week
- A couple of scenarios to watch moving forward
DAX turn lower from resistance brings support to light
In last week’s DAX commentary, we discussed the obstacles which laid ahead in the form of confluent resistance between the trend-line running down off the June peak and the underside of the February 2016 trend-line. This turned out to be a key spot as anticipated, and with the quick trade lower has important support in focus.
The area around 12100 put a floor in on a couple of occasions, once in June and then again in August, before giving way in September. Despite the trade lower and back higher through this area this month, it could still be impactful soon.
A test and hold will bring in the possibility of a not only a higher low from earlier in the month, but could also forge out a right shoulder of an inverse head-and-shoulders pattern. The June trend-line is near the neckline, which if the pattern is to be validated both will need to be broken.
Another scenario is for price to get jammed up between the June trend-line and 12100 before making a break one way or the other. Both of these are just scenarios, but in any case, there is support (12100) and resistance (June t-line) to contend with for the time-being.
From a tactical standpoint, for now, we are trading between support and resistance, and as such it makes for a tricky spot. But soon we should have better clarity on which way the market may want to resolve itself.
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DAX Daily Chart (12100 support, June t-line, H&S?)
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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.