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DAX 30/CAC 40 Technical Highlights

  • DAX pulling back from resistance, has room to go
  • CAC weakness could soon bring the 2011 t-line back into play

To see our intermediate fundamental and technical outlook for the DAX & Euro, check out the DailyFX Q1 Forecasts.

DAX pulling back from resistance, has room to go

Last week the DAX extended into minor resistance from December along with a slope extending down from the low in October. Selling hasn’t been fierce so far and may not become aggressive if current weakness turns out to be nothing more than a pullback before a larger recovery develops.

A drop down to around 10800 may develop before buyers step in again. This could create a bottoming inverse head-and-shoulders pattern if we see a higher low develop (right shoulder). This scenario would play well to the notion that more corrective price action needs to unfold before another larger leg lowe develops.

This is of course only a loose scenario, but one worth considering if the market doesn’t fall apart from here. For now, short-term shorts are viewed as having the upper hand, but momentum isn’t expected to be particularly strong.

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 (More pullback likely)

DAX daily chart, more pullback likely

CAC weakness could soon bring the 2011 t-line back into play

The CAC was unable to reach into resistance levels before turning lower and is thus far demonstrating relative weakness to the DAX. This is seen as making shorts potentially smoother in the French index. A retest of the important 2011 trend-line could soon be in order. A decline to the trend-line will warrant caution on shorts and possibly provide a backstop for would-be longs.

CAC Daily Chart (2011 t-line retest may come soon)

CAC daily chart, 2011 t-line retest may come soon

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.

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX