DAX 30 Technical Analysis – Bounce Set to End Soon
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DAX 30 Technical Highlights
- DAX bouncing off important long-term 2011 trend-line
- Resistance ahead should soon put a cap on further strength
- Long-term trend support may hold in near-term, but eventually break
DAX bounce isn’t viewed as likely to last much longer
The DAX has for now successfully held the long-term trend-line dating back to 2011, and while it is lifting modestly, strength is at odds with general trend and tone considerations. Not far ahead is a small trend-line to contend with crossing over recent peaks created at the neckline of the long-term head-and-shoulders pattern.
Even if that line is breached the neckline of the H&S formation is just beyond and is likely to be staunch resistance for a market that is on its heels. On a touch of either form of resistance, a shove back lower should give shorts the upper-hand again in the near-term or longer.
A push lower from either current levels or the aforementioned resistance will once again have the 2011 trend-line back in play. It is a sort of tug-of-war between neckline resistance and trend-line support, but from where I sit the broader topping pattern still holds to be the more important technical event. This isn’t just any head-and-shoulders, it’s one that runs back to June of last year – it’s massive in size and suggests the market is in for a large decline.
Nevertheless, we must still respect the trend-line for what it is – support. More time playing ping-pong between top and bottom-side thresholds may be in store before an eventual break. Keep an eye on the U.S. markets as they try to regain their footing, as a break lower with force may have other global markets facing new lows in the current down sequence, including the DAX finally breaking the 2011 trend-line.
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DAX Daily Chart (Bounce looking only temporary)
DAX Weekly Chart (Caught between neckline & t-line)
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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.