DAX 30 & CAC 40 Charts: Running into Resistance and ECB
DAX 30/CAC 40 Technical Highlights
- DAX rally impressive, may slow as resistance comes into focus
- CAC challenging summer highs, stiff resistance there
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DAX rally impressive, may slow as resistance comes into focus
The DAX has been rallying in impressive fashion, with it rising six straight sessions. The gap from August 1 was completely filled yesterday, brining into focus other resistance levels. The ECB is tomorrow, and the market appears to be pricing in the cut to the overnight deposit rate and possibly more.
If this is the case, barring a significantly more dovish-than-expected outcome, a sell-the-news scenario could be setting up for the days to follow. Resistance clocking in between 12435, the trend-line from the January 2018 high (~12500), and underside of the December line could prove timely in providing a capper to the recent run.
A pullback at the least looks near, if not the development of a right shoulder of a head-and-shoulders pattern. It’s a possibility we’ve been discussing lately, but the DAX will need to turn down soon for this to still be in the cards.
For now, wait-and-see heading into tomorrow, but given the extended move towards resistance ahead of a key event, it appears the market is set up to disappoint the longs.
DAX 30 Daily Chart (resistance ahead)
CAC challenging summer highs, stiff resistance there
The CAC has lost some momentum lately, and for good reason as resistance sits just ahead. The area over 5600 up to 5672 could prove problematic. The summer high is arriving around the important peak set in May of last year. The scenario is of course similar to that of the DAX, upside limited and potential for a topping pattern.
CAC 40 Daily Chart (summer, May ’18 highs)
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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.