DAX 30 & CAC 40 Technical Update: Support, Patterns to Watch
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DAX 30/CAC 40 Technical Highlights
- DAX sell-off brings December trend-line into play
- CAC 40 could be in the process of creating an H&S pattern
DAX 30 sell-off brings December trend-line into play
The DAX taking a hit yesterday has important trend-line support in play again. The trend-line running up from December was proven to be a worthy line of support last week when the DAX posted a swift reversal-day on Wednesday.
Further weakness will quickly have the trend-line back in play, followed by the most recent swing low at 11844. The area right around there has held on several occasions since the April 3 gap. A break below would have the trend-line broken and a lower-low taking shape. This would be reason to look for a sell-off to deepen.
But as always, support is support until broken. We may very well see another strong stance by buyers should trend, horizontal support get tested here again soon. Should that be the case, then would-be longs may have another opportunity to buy the market with a solid backstop in place to use for assessing risk.
All-in-all, the next few sessions could bring further clarity as to how the DAX wants to shape up for the foreseeable future. Right now, it is pretty clear that the aforementioned levels are important, it’s just a question of how the market wants to respond to them on any further testing.
DAX 30 Daily Chart (t-line, 11844)
CAC 40 could be in the process of creating an H&S pattern
The CAC 40 is presenting the possibility of a head-and-shoulders top with its most recent turn lower. It is only a scenario at this time until we see the neckline broken, but one worth tracking. A break below the neckline would likely coincide with the DAX breaking support. For now, in wait-and-see mode…
CAC 40 Daily Chart (Possible H&S pattern)
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---Written by Paul Robinson, Market AnalystYou can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.