DAX/CAC Technical Outlook:
- DAX maintaining rally, but needs to break significant resistance for more gains
- CAC is trading is holding well, has less obstacles to rally than the German index
The DAX exploded higher earlier this month, and since ending the surge it has showed impressive strength by retracing very little. The consolidation pattern could lead to higher prices, but will need to break through strong resistance to do so.
Since the latter part of July the DAX has struggled to stay above 13k for long, with three declines of varying degrees unfolding from the vicinity. A closing print above 13350 should do the trick in getting further clearance towards the gap-fill from February at 13579 and the record high at 13795.
Should the DAX fail to climb above resistance we will need to monitor the degree of selling that may come in should that be the case. A minor retracement could perhaps be transitory while a sudden and sharp start to a decline could suggest a broader sell-off is getting underway.
DAX 30 Daily Chart (consolidating below resistance)
The CAC continues to impress after its surge off the monthly low. Not only has it not retraced but it is working on trading higher in the absence of any significant resistance. This doesn’t mean it is all clear to trade higher, but the path of least resistance is to the upside. In the event of a decline, the 5200-area will be watched as a potential source of support.
CAC 40 Daily Chart (holding onto gains thus far)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
