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DAX & CAC 40 Technical Outlook: Toeing the Line

DAX & CAC 40 Technical Outlook: Toeing the Line

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DAX/CAC Technical Highlights:

  • DAX wedge shape-shifted, Jan t-line most important threshold to watch
  • CAC very near breaking down out of channel, below trend support

DAX & CAC 40 Technical Outlook: Toeing the Line

The DAX is on the verge of rolling over from a ‘wedge-like’ formation that has done a little shape-shifting the past couple of weeks. The primary line to watch here is the January to current trend-line that makes up the underside of the would-be wedge formation.

So far it is holding, but given how price action is hugging it, likelihood of it breaking is increasing. The breaking of a trend-line doesn’t necessarily mean the trend is changing, but risk rises significantly that a decline of some magnitude is about to unfold.

To confirm a trend-line break, I would like to see a lower-low develop beneath 15309. At that juncture the March 2020 trend-line would become targeted as the next meaningful level of support. It currently resides just under the 15k mark.

If the trend-line continues to hold, then there isn’t good reason to be aggressively bearish, and in fact in keeping with the spirit of “support is support until it isn’t”, it keeps longs supported in-line with the overall trend.


DAX Daily Chart

DAX daily chart

DAX Chart by TradingView

The CAC is also barely hanging onto a level of support after making a minor lower-low. It has been the stronger of the two big European indices, but that could change here soon if trend support from late last year to early this year breaks. But before getting to that support is to be respected until broken. A bull-flag could be on the build that sends the CAC higher. Keep an eye on the DAX as well for further cues.

CAC Daily Chart

CAC daily chart

CAC 40 Chart by TradingView

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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.