DAX 30 & CAC 40 Charts: Near-term Strength May Soon Fade
DAX 30/CAC 40 Technical Highlights
- DAX pushing higher out of short-term H&S towards gap-fill
- CAC running up against a couple of degrees of resistance
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DAX pushing higher out of short-term H&S towards gap-fill
The DAX continues to push higher out of the inverse head-and-shoulders (H&S) pattern we discussed last week. This could continue to be bullish for the index for a little while longer, with the August 2 gap-fill not too far ahead at 12253.
But even though the near-term picture is bullish and the rally off the lows has taken the DAX a good distance higher since last month’s low, the broader outlook may still be quite bearish. A larger, traditional type of H&S formation is still on the table.
A turn down soon will fill out the right shoulder. A development that isn’t yet mature enough to act on, but a scenario worth keeping a watch on. At the moment, the DAX is still trading with a mildly bullish tone.
DAX 30 Daily Chart (watch the gap)
CAC running up against a couple of degrees of resistance
The CAC is arriving at a very interesting spot on the charts. The rise has been a choppy one, with lots of overlap in price action, but nevertheless it has kept the French index moving higher. It’s currently trading at the underside of the December trend-line not too far from a full gap-fill up to 5557.
We could soon see the CAC turn down and break the underside trend-line of a wedging formation that embodies the choppy trade. A rejection from resistance and break of the wedge could mark an important sequence, as the right shoulder of a broad H&S pattern would start to become visible.
CAC 40 Daily Chart (rising into resistance)
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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.