DAX/CAC Technical Highlights:
- DAX trading back in record territory now that it is out of the range
- CAC in multi-year territory, but doing so from a half-formed range
The DAX is back in record territory after going through a set of conditions that created a volatile range. Given the instability of the range it will be of importance for the recent breakout to show signs of stability.
See a period of digestion here just above the 15500 area would do the index some good as it tries to get its legs underneath it. A pullback from here beneath what is now viewed as support wouldn’t necessarily be a bearish omen, but could make getting a handle on the bias a little more difficult.
From a tactical standpoint, chasing the breakout might not be the best play here, instead waiting to see if it can hold first could offer the best risk/reward scenario. Short positions at this time hold no appeal in the absence of supporting price action.
DAX Daily Chart
The CAC 40 is trading at multi-year highs, with the record high at 6944 some distance away. The index may be on track to get there, eventually, but a lot of work needs to be done before here and there. The breakout is encouraging to a degree, but it would have been more ideal to see it occur from a steadier base.
A pullback well below 6400 won’t be reason to turn bearish yet, as the trend continues to be pointed higher, but like the DAX is would be ideal to see some stability form as new levels are getting carved out. The tactical approach is the same, wait-and-see how things play out before making a commitment.
CAC Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
