DAX/CAC Technical Highlights:
- DAX held March trend-line and looking towards new highs
- CAC is around new cycle highs, higher still looks in the cards
DAX & CAC 40 Technical Outlook: Trending Towards New Heights
The DAX hit the March trend-line not long ago and quickly rallied off it, putting the top-side back into focus. There lies ahead a test of record highs around the 15800 mark, but if the overall strength of the trend has anything to do with it, a breakout should come soon.
Even if a breakout doesn’t happen immediately, further digestion may do the market some good in having an even larger move to the top-side. Price may get wedge up between the record high and March trend-line that results in about two months-worth of consolidating. A breakout from a base of that size could send the DAX meaningfully higher towards 16k or better.
Tactically speaking, a breakout could offer up trend traders an opportunity for momentum to kick in. Further consolidation before that is seen as an even better opportunity. A pullback to the March trend-line would offer up perhaps the best risk/reward opportunity as a clear line-in-the-sand acts as a threshold to assess risk from.
The only scenario at this juncture that would seem to offer up a look for shorts, is if the March trend-line is broken with some force. Even then I could be tough because while the trend-line is broken it doesn’t mean the trend has yet to change. A lower high, lower low sequence would be needed at that point to bolster the outlook for shorts.
DAX Daily Chart
The CAC is back very near the 6687 cycle high. It’s been stronger than the DAX and this may continue to be the case. A consolidation or small pullback around the highs may offer up an opportunity for would-be longs to join the trend.
CAC Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
