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DAX 30 Technical Highlights

  • DAX downside looks limited in the near-term
  • Upside capped by poor market tone, resistance

We’ve got forecasts, trading ideas, and educational content on the DailyFX Trading Guides page.

DAX may stay relatively stagnant through year-end

There hasn’t been a lot of developments to discuss lately with regards to the DAX, which may be a good thing for the health of the market. Quiet has become the new bullish with poor technical posturing hanging over the German benchmark’s head from a long-term standpoint.

The head-and-shoulders dating back to June 2017 and broken 2011 trend-line are very significant big-picture technical events pointing to much lower prices. But we may not have major selling until after first seeing a little side-ways to upward price action.

If the DAX rallies from here it will be quick to bump its head into overhead levels, with the lows from last month right around the 11k-mark, followed by the trend-line from September, and underside of the 2011 trend-line just mentioned. One of those looks likely to stop a poorly postured market from bouncing. If it wants to rally at all.

Looking lower there isn’t much support for the market to lean on other than it may be a bit oversold. Yesterday, the U.S. markets tagged off on some big support levels from earlier this year, which could be a positive if they hold into year-end. Given their global impact this may be enough to help keep sellers at bay elsewhere.

This doesn’t make for a confident situation to be long, just more of a warning that newly established shorts may come under pressure. From where I sit a bounce would be a welcomed event for would-be shorts to sell on a touch and turn lower from solid resistance levels. At the immediate moment, we are in a bit of limbo as the DAX isn’t situated at anywhere particularly meaningful and this week is set to be the last of full market participation before holiday trading conditions set in.

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 (Resistance to show quickly on strength)

DAX daily chart, resistance to show quickly on strength

Want to learn more about trading the DAX? Check out ‘How to Trade the DAX’, and join me weekly for technical updates in the Indices and Commodities webinar.

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX