DAX 30/CAC 40 Technical Highlights
DAX breaking through December trend-line
The DAX is currently trading below the trend-line from December. With a little more weakness price support around 11844 will also be broken, helping carve out a lower-low from May 13. This occurrence will be arriving after the May 16 lower-high relative to the monthly high.
This creates a situation where you have not only an important trend-line broken, but also the first true bearish price sequence in place since the low to end last year. This is seen as potentially setting the market up for a broader decline.
First up as support under 11844 is a gap-fill from April 2 at 11755, followed by the 200-day MA at 11617 which is in confluence with the lower parallel tied to the t-line running off the monthly high, another gap-fill at 11526, then the March low at 11300.
DAX Daily Chart (December t-line broken)
CAC 40 breaking neckline of H&S pattern
Last week, we looked at the possibility of a head-and-shoulders pattern coming into play, and as long as a close below the neckline takes shape today then the pattern will be validated. The 200-day is nearby at 5183 but may not present much support as it stands by itself and arrives shortly after an important pattern-break.
The height of the pattern from head to neckline points to a ~350 decline from the neckline around the 5250-mark, or to around 4900. There aren’t any real significant levels of support between here and there.
CAC Daily Chart (H&S neckline breaking)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX