DAX 30 & CAC 40 Technical Outlook Weakens, More Pressure to Follow
- DAX expected to trade lower after hitting resistance
- CAC trading under December trend-line
DAX expected to trade lower after hitting resistance
Last week, the focus was on the way momentum had slowed to a crawl in major European indices, with the DAX possibly having one more small move higher before hitting resistance. On Friday, price moved up to the September swing-high and closed not far of the session’s best levels.
Over the weekend with Trade Wars between the U.S. and China flaring up again markets are going into ‘risk-off’ mode as a response. Whether it was this catalyst or another, global stock markets (as we looked at with regard to the U.S. on Friday) looked poised for a set-back.
The first meaningful level to watch as support is a swing-high from a month ago at 12029, followed up by the trend-line from the December low. There is a sizable gap-fill down to 11754 to pay attention to should selling accelerate towards the trend-line.
In the very near-term we may see an attempt to fill today’s gap, but efforts could quickly fail as this may be the break-away surprise gap that will take some time to repair. With that in mind, running with a short trading bias looks to be the way to go for now given the recently extended nature of the market and sudden break.
DAX Daily Chart (may be break-away gap from high)
CAC trading under December trend-line
The CAC is in an even more precarious position than the DAX, with it having not only shown more relative weakness lately, but also gapping below the trend-line off the December low. The CAC is already near a gap fill down to 5423, with another gap to watch down to 5350 to keep an eye on. There aren’t any significant swing-low levels until just above 5200 where the 200-day lies just below by a few points.
CAC Daily Chart (under trend-line support)
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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.