DAX 30 & CAC 40 Charts – Backing Down into Important Channel Support
- DAX testing important channel support from December
- CAC maintaining incredibly tight channel for now
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DAX testing important channel support from December
It’s getting to be a thick spot for the DAX right here, with a lot going on big-picture and in the short to intermediate-term. Starting with the view from above, on the weekly chart the German benchmark is trading around the neckline of a broad head-and-shoulders pattern, the low from a year-ago, the 200-day, and underside of the trend-line from 2011.
Tuesday saw the market higher and a close at the 200-day, which has since brought with it some fairly aggressive short-term weakness. Yesterday, the market traded down to the lower parallel of the channel off the December low and posted a smallish reversal candle. It wasn’t anything ultra-bullish but suggests for now the market wants to stay in the channel.
The thinking is, is that if we are to see the DAX make a long-term turn lower that an edge in trading from the short-side won’t materialize until at the very least the bullish structure from December is broken. As long as the channel is maintained then a neutral tone at worst will be maintained. It’s tough being a long though with so much resistance in the vicinity.
All-in-all, for now, going to wait and see how this battle of support and resistance shakes out before running with a trading bias.
DAX Daily Chart (Testing December channel)
DAX Weekly Chart (Big area right here)
CAC maintaining incredibly tight channel for now
The CAC backed off a little from around the trend-line extending over from May, but to keep it supported is the channel off the December low. It’s one of the more impressive technical structures out there right now, with the ride higher having been extremely smooth. Stay within and the story remains the same, but fall outside then we may see some weakness set in. Generally speaking, market isn’t very attractive from either side of the tape at the moment.
CAC Daily Chart (Tight-roping channel)
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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.