DAX 30 & CAC 40 Technical Outlook Uncertain, Levels/Lines to Watch
DAX 30/CAC 40 Technical Highlights
- DAX holding strong up against minor resistance
- CAC off the highs but has trend support
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DAX holding strong up against minor resistance
On Thursday, the DAX traded up to the underside of the trend-line running higher from the December low, and then posted a sharp reversal day. The bearish reversal candle suggested that downside follow-through may be in store, but so far that has not been the case.
Currently the market is trying to push beyond the reversal-day high, but if it does the December t-line and a minor swing-high from July 2018 stand in a way of a further advance. If another reversal develops after having just posted one, from the area of resistance, then we could see a larger pullback develop.
In this scenario, the July high at 12656 will be a small level of support to watch, followed by a much stronger area just under the 12500 level (in green on chart). If the market keeps trading higher, it doesn’t present a good risk/reward long given it is extended and has aforementioned resistance to climb. Ideally, for would-be longs a pullback develops first before continuing to run. For now, sitting tight until further cues.
DAX 30 Daily Chart (strong but at resistance)
CAC off the highs but has trend support
Last week, the CAC ran into resistance via the trend-line running over peaks since the April high. The strong reversal candle posted on Thursday, unlike it did with the DAX, has led to a bit of weakness. Overall the CAC remains postured in an upward moving market, but may want to test support coming from the trend-line off the August low.
Another interesting development to watch is how price action is getting wedged up between the top-side trend-line from April and the August trend-line. This could lead to an explosive move should we see price action tighten up a little more before breaking either line.
CAC 40 Daily Chart (trading at trend-line 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.